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First Mining Gold and Treasury Metals close deal to merge the Goldlund and Goliath gold projects in Ontario

The deal creates a district-scale multimillion-ounce gold development project in the province that is poised to advance towards construction

First Mining Gold Corp. -
Treasury is initiating a 25,000-metre drill program on the property and complete an economic evaluation of Goldlund-Goliath by late 2020

First Mining Gold Corp (TSE:FF) (OTCQX:FFMGF) announced Friday that it had closed its deal with gold junior Treasury Metals Inc (TSE:TML) (OTCQX:TSRMF) to merge the Goldlund and Goliath properties in Ontario.

The deal creates a district-scale multimillion-ounce gold development project in the province that is poised to advance towards construction.

Vancouver-based First Mining will become the largest shareholder in Treasury Metals, which will operate the project going forward.

READ: First Mining Gold intersects 173.9 grams per ton gold as it wraps up drilling at its flagship Goldlund project

"We are delighted to become the largest shareholder of Treasury Metals and are excited to see the combined Goldlund-Goliath project move forward," said Dan Wilton, CEO of First Mining in a statement.

"This combination has already unlocked meaningful value for First Mining shareholders and leaves the company with significant exposure to the strong exploration potential at Goldlund.” First Mining shareholders will become direct shareholders in Treasury Metals once the company distributes a portion of the equity consideration to First Mining shareholders next year, Wilton added.

Toronto-based Treasury is initiating a 25,000-metre drill program on the property and completing an economic evaluation of Goldlund-Goliath by late 2020.

“Treasury Metals is now well-funded to advance both projects through an economic study to better understand the merits and synergies of these adjacent properties,” Wilton told shareholders.

“Concurrently, through further drilling and work programs, we look forward to seeing Treasury Metals unlock the significant resource growth potential of both assets through exploration of both the existing resource areas and the district-scale land package."

Deal terms

Under the deal’s terms, Treasury acquired 100% of the shares in First Mining’s subsidiary Tamaka Gold Corporation, which owned Goldlund. As consideration, First Mining receives 130 million shares of Treasury as well as 35 million warrants exercisable at C$0.50 for a three-month period. In addition, First Mining will retain a 1.5% net smelter returns royalty covering all of the Goldlund claims, with an option for Treasury to buy back 0.5%.

The company also receives a cash payment of C$5 million, with 50% payable on the receipt of a mining lease on Goldlund and the remaining half payable on once 300,000 tons of ore are extracted from the open pit mine.

First Mining plans to distribute 70 million Treasury shares and 35 million warrants to its shareholders within the first year of closing the transaction. The firm will also appoint CEO Wilton to Treasury’s board along with Frazer Bourchier and David Whittle, who will keep their positions as long as First Mining holds more than 10% of Treasury’s shares.

Shares of First Mining dipped 1.8% in Toronto at C$0.54 on Friday morning while Treasury’s shares were down 1.7% at C$0.58.

Contact Angela at [email protected]

Follow her on Twitter @AHarmantas

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