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Canadian gold explorer Gowest (TSXV: GWA) has agreed with a group of existing shareholders collectively holding 91.5% of the company’s outstanding share capital to buy back those shares and go private.
The shareholder group is comprised of Lush Land Investment Canada Inc., Greenwater Investment Hong Kong Ltd., 1000216244 Ontario Inc., Debao Wang, Yun Zhao, Fortune Future Holdings Ltd., Meirong Yuan, and C. Fraser Elliott and his company CFE Financial Inc.
For each share held, the group will receive C$0.15 cash, which is a 114% premium to Gowest’s last closing price of C$0.07 on the TSX Venture Exchange. At press time, the stock is trading at C$0.14, for a daily gain of nearly 93%. The company’s market capitalization was C$90.6 million.
Gowest will also merge with an Ontario-incorporated company controlled by the shareholder group to create a new company, whose shares will then be distributed to the remaining shareholders on a one-for-one basis to complete the go-private transaction. Those shares will be redeemed also at a price of C$0.15.
With respect to the going-private transaction, Gowest CEO Dan Gagnon pointed to the challenges the company has faced over the years in raising sufficient capital to carry out its objective, which is to develop the Bradshaw deposit in Ontario.
“This transaction will allow a small group of our committed investors, who historically have been our most substantial source of capital, to bear the significant continuing exploration, financing and other risks facing the company going-forward,” Gagnon said in a news release.
The Bradshaw deposit is part of Gowest’s larger North Timmins gold project within the Abitibi greenstone belt. It comprises one patented mining claim, 11 mining leases and 56 unpatented mining claims for a total area of 109 sq. km.
The primary area of interest has been the Frankfield property, where gold mineralization was first discovered in 1974 before Gowest took over the project. Drilling in the 2000s led to an initial inferred resource estimate for Frankfield East, now the Bradshaw deposit, of 2.4 million tonnes at 6.5 grams per tonne gold for 510,000 oz.
The project moved to the pre-feasibility study stage in 2015, with an upgraded resource of 2.1 million tonnes grading 6.19 g/t gold in the indicated category and 3.6 million tonnes grading 6.47 g/t gold in the inferred category.
