Silver Mountain Mines has signed binding definitive merger agreement with NevGold to create a new diversified exploration and development company.

The deal follows signing of a Letter of Intent between Silver Mountain Mines and Nevgold in January.

Under the terms of the deal, Silver Mountain will acquire all the issued and outstanding common shares in the capital of Nevgold.

Nevgold has right to acquire the Limousine Butte and Cedar Wash Projects in Nevada from McEwen Mining .

Covering an area of approximately 66.5km2, the Limousine Butte project consists of 821 unpatented mining claims on federal Bureau of Land Management (BLM) land.

Located in Lincoln County, Nevada, the Cedar Wash consists of 239 unpatented mining claims on federal BLM land. It covers an area of approximately 19.3km2.

As per the asset purchase and sale agreement signed in December last year with McEwen and certain of McEwen’s affiliates, Nevgold will acquire the certain properties from McEwen prior to or concurrently with the proposed transaction with Silver Mountain Mines.

Silver Mountain Mines director Steve Konopelky said: “The combination of the Silver Mountain Mines and Nevgold assets will add value for all shareholders and expand our assets across North America in well established mining camps.

“With the new leadership team, asset portfolio, and recapitalization plan, the company should be in a great position for success as the market for commodities continues to grow.”

The proposed transaction, which is planned to be closed in second quarter of this year, is subject to several terms and conditions.

Nevgold incoming president, CEO, and director Brandon Bonifacio said: “We are very excited to form a new North American focused precious metals exploration and development company with assets in Nevada and British Columbia that will attract a premium market valuation.”