Alio Gold Inc. agreed to sell noncore assets in Nevada to Coeur Mining Inc. for US$19 million in Coeur shares.
The assets include the Lincoln Hill-Gold Ridge project, the Wilco project and other nearby claims in Nevada adjacent to Coeur's Rochester mine, which will more than double its land position from roughly 16,300 acres to over 40,300 acres.
Coeur President and CEO Mitchell Krebs said, "The Lincoln Hill project provides higher-grade ounces located near Rochester's infrastructure, which should allow us to generate high returns, higher margins and strong cash flow with little incremental capital." The company hopes to process ore from the newly acquired projects at Rochester, allowing it to potentially extending the mine's life.
Additionally, Alio said Oct. 16 that it reduced its outstanding debt with Macquarie Bank Ltd. to US$5 million from US$15 million June 30 and expects to fully repay the debt during the fourth quarter.
The company also updated its surety bond for the Florida Canyon mine in Nevada, releasing US$5.1 million in cash, and settled a US$5 million contingent liability related to its acquisition of Rye Patch Gold Corp. and Florida Canyon earlier this year.
Alio CEO Greg McCunn said the debt reduction and higher working capital would allow the company to ramp up Florida Canyon.
The transaction is expected to close in the fourth quarter.