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GFG Resources to acquire Rapier Gold in all-share deal

GFG Resources Inc. on Dec. 11 unveiled a string of deals that will consolidate its land package within Timmins, Ontario, and give the company control over a total of nearly 700 square kilometers of gold assets in Wyoming and the Canadian province.

In three separate transactions, GFG agreed to acquire Rapier Gold Inc. in an all-share deal and purchase Probe Metals Inc.'s West Porcupine gold project and Osisko Mining Inc.'s Swayze gold project, both of which are in Ontario.

GFG will acquire Rapier's entire share capital, offering 0.15 of a common GFG share for each Rapier share, representing a consideration of 8 Canadian cents per Rapier share based on GFG's Dec. 7 closing price on the TSX Venture Exchange. The arrangement will require Rapier shareholders' approval during a special meeting to be held in February 2018 and is subject to GFG completing a financing of at least C$5 million, along with other customary approvals.

Rapier's board recommended that shareholders approve the transaction and certain directors, officers and shareholders owning a combined 35% of Rapier's outstanding signed agreements to vote their stakes in favor of the buyout.

As for the property deals, GFG will purchase the West Porcupine property for 6,477,883 GFG shares, worth about C$3.5 million based on GFG's 20-day volume weighted average price, and the Swayze project for 1,110,494 GFG shares, representing an implied price of approximately C$600,000.

In line with the transactions, GFG will raise up to C$7 million through a private placement of up to 3,636,364 flow-through common shares at 55 cents apiece and 10 million units at 50 cents each.

Proceeds from the flow-through share offering will be used for exploration activities in Ontario, while the proceeds for the units' placement will be used for exploration in Wyoming and Ontario and for general working capital. GFG is planning to "aggressively drill" its Rattlesnake Hills gold project in Wyoming and its Timmins portfolio in 2018, with a maiden resource estimate for Rattlesnake Hills slated to be released in the first half of 2018.

GFG expects to complete the two property deals and the financing on or around Dec. 21, while the Rapier acquisition is anticipated to close in mid-February 2018. Upon completion of all the transactions, current GFG shareholders will own 58% of the company's shares, on a nondiluted basis, and the former Rapier shareholders will hold 17%.