Northern Vertex, Eclipse Gold to merge and create new U.S. gold producer

Northern Vertex Mining and Eclipse Gold have entered into a definitive arrangement agreement for an at-market merger to create a gold producer focused on the western United States. With Northern Vertex as the resulting company, the new entity would hold the Moss heap leach mine in Arizona (through Northern Vertex) as well as the Hercules exploration project in Nevada’s Walker Lane trend (through Eclipse).

As part of the deal, each existing common share of Eclipse would be exchanged for 1.09 shares of Northern Vertex, based on 20-day average prices of the two companies as of Dec. 4. As a result, 71% of the combined company would be held by Northern Vertex shareholders, Eclipse equity owners would hold the 18% and new shareholders would own the remaining 11%.

The combined company would be led by Douglas Hurst from Eclipse as chair, with the management team made up of Kenneth Berry as president and CEO (Northern Vertex’s current president, CEO and director), David Splett as CFO, Michael Allen as executive VP of corporate development and Warwick Board as VP of exploration. Five directors would be from Northern Vertex (Geoff Burns, Michael Haworth, David Farrell and James McDonald, in addition to Berry) in addition to Marcel de Groot and Hurst from Eclipse.

“The result of this transaction will be a combined company with a greatly strengthened balance sheet, and an enhanced team with extensive experience growing multi-asset gold companies. This represents a significant step toward our unwavering vision of building a top of the class mid-tier gold producer,” Berry said in a release.

“This combination gives Eclipse shareholders exposure to creating value on a larger scale, supported by positive cash-flow,” added Michael Allen, president, CEO and a director of Eclipse. “This combination aligns all the key elements required toward building America's next mid-tier gold growth story.”

Alongside the merger, the companies have announced a best-efforts private placement of subscription receipts by Eclipse, for minimum proceeds of $20 million, led by Stifel GMP. Each receipt, sold at 50¢, will ultimately be converted into one Northern Vertex share.

Maverix Metals has agreed to exercise an estimated 19.5 million share purchase warrants of Northern Vertex, for gross proceeds of $7.8 million. As part of the transaction, the royalty company will then sell these shares to Eclipse for $9.8 million. Proceeds of the private placement offering will be used to buy the shares back from Maverix. Overall, the combined company is expected to have a pro-forma cash balance of approximately $29 million.

The resulting company will have offices in the U.S. and Canada.

The transaction has been approved by the boards of both companies and is subject to approval by Eclipse shareholders and the receipt of regulatory and court approvals, among others. The Eclipse shareholder meeting is expected to be held in February. The agreement includes a $2-million termination fee payable by either party.

In its most recent operating quarter, Northern Vertex’s Moss mine generated 14,673 gold-equivalent oz., at all-in sustaining costs of US$1,317 per ounce. Eclipse holds the 85-sq.-km low sulphidation epithermal gold-silver Hercules property.

For more information, visit www.NorthernVertex.com or www.EclipseGoldMining.com.