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Mongolia-based precious metals company Steppe Gold has signed an arrangement agreement to acquire Canadian miner Anacortes Mining.

The deal is expected to result in the formation of a leading junior gold producer with the prospect of ‘significant’ growth in the near term.

It will see Steppe Gold purchasing all of the issued and outstanding common shares of Anacortes, which owns 100% of the Tres Cruces gold project in north-central Peru.

The project is 127km from Trujillo, on the Pacific coast.

Steppe Gold and Anacortes signed a binding letter of intent for the acquisition in March and extended the agreement last month.

Situated near the existing Lagunas Norte project, the Tres Cruces project includes a large and underexplored land package.

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It has indicated resources of 2.5 million ounces at 1.65g/t and inferred resources of 104,000oz at 1.26g/t, inclusive of 630,000oz of high-grade 1.28g/t of leachable gold.

According to the agreed terms, Anacortes shareholders will be entitled to receive 0.4532 of a Steppe Gold common share for every share held, with each Anacortes share valued at around C$0.48 ($0.359).

Once completed, Steppe Gold and Anacortes will own 79% and 21%, respectively, of the combined company.

Steppe Gold president and CEO Bataa Tumur-Ochir said: “We are very pleased to add one of the highest-grade undeveloped oxide gold deposits in the world to our development pipeline. Having recently built a heap leach gold mine in Mongolia and now in production since 2020, this next project works well in our sequence of production growth to come online in the next few years.

“Our vision is to build a 200,000oz gold equivalent production profile, with our ATO phase two expansion project expected to come online in 2025 and the Tres Cruces Mine moving to production soon thereafter. The Tres Cruces project has many similarities to our ATO project, with an oxide deposit at the surface that can be quickly brought into production with significant upside in the underlying fresh rock.”

For Steppe Gold’s shareholders, the transaction will add a growth pipeline in the form of Tres Cruces, which is said to be a project with low capital intensity.

The project has the potential to add 68,000oz of gold production per annum.

The deal has secured clearance from the two companies’ boards, with the Anacortes board unanimously recommending its shareholders to vote in the deal’s favour.

It also awaits court and stock exchange approvals. 

Anacortes president and CEO James A Currie stated: “The Transaction offers our shareholders with an immediate and attractive premium, in addition to meaningful ongoing ownership in the combined company. We see this as an excellent opportunity for our shareholders to participate in a growing junior gold producer that will have an enhanced ability to advance and develop the Tres Cruces project.”