Calico Resources Shares Surge on Sale of Grassy Mountain Gold Project

Calico Resources Shares Surge on Sale of Grassy Mountain Gold Project

By: Dylan Sikes - AllPennyStocks.com News

Tuesday, December 3, 2013

The volatility of gold and silver prices in 2013 has slowed merger and acquisition activity, as many majors seem more focused on cost-cutting actions to try and fence in some profits. Big-ticket acquisitions, which require a lot of capital expenditures, have especially been limited this year as companies lick their wounds from paying premium prices when precious metals were soaring in recent years. That leaves companies searching for projects that have significant proven reserves that are owned by other miners looking to divest some assets in favor of working capital and royalties. In a three-way deal announced on Tuesday, Calico Resources Corp. (TSX-Venture:CKB) and Seabridge Gold Inc. (TSX:SEA) agreed to terms with privately-held RockStar Resources, Inc. regarding the Grassy Mountain Gold project in Oregon. Calico Gold is selling the project to RockStar via the sale of all the shares of Calico Resources USA Corp., it’s wholly-owned subsidiary, for $30 million and 1-percent net smelter returns royalty. The Grassy Mountain Gold project is the only property of Calico.


The 9,300 acre property is in the advanced stages of exploration with reported resources of 2.3 million ounces of gold and 5.8 million ounces of silver and a current projected mine life of 10 years, as well as a large portion of unexplored land.

The acquisition will be the first property in the portfolio of RockStar, a company formed in September and headquartered in Coeur d’Alene, Idaho.

Seabridge, which holds 10-percent net profits interest royalty and related put option currently recorded against the property, will discharge its interest in exchange for a $5 million payment from RockStar and a payment of $2.5 million from Calico. Seabridge and Calico have agreed that special warrants of Calico held by Seabridge will be converted into common shares of Calico. Seabridge, which is Calico’s biggest shareholder with 10.1 million shares of the 51.7 million outstanding shares, has entered into a support agreement for the transaction.

RockStar made an initial payment of $350,000 to Calico at the signing of the binding Memorandum of Understanding. Additional payments totaling $700,000 are due by the end of February, at which time Calico must have shareholder approval for the sale, or the monies are due back to RockStar. Conversely, RockStar has to have raised the funds for the purchase by that time (or seek to extend the closing date) or the down payments are Calico’s to keep, provided it has shareholder and exchange approval completed.

"The sale of the Grassy Mountain Project will provide our company with sufficient funds to grow the business during these difficult times in the market. The retention of a Net Smelter Return royalty will provide Calico with an opportunity to enjoy the upside potential of the project in the future as well,” said Buck Morrow, president, chief executive and chairman of Calico, in a statement today.

Shares of CKB have shot ahead to new 52-week highs in early Tuesday trading, printing up to 26 cents from a closing price of 12 cents on Monday. Shares were down 48 percent so far in 2013 through Monday, but have recaptured all of those losses with the morning move. Shares of SEA are down 5 cents at $7.24, hovering just above 7-year lows.

Copyright © 2013 AllPennyStocks.com. All rights reserved. Republication or redistribution of AllPennyStocks.com's content is expressly prohibited without the prior written consent of AllPennyStocks.com. AllPennyStocks.com shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Other Penny Stock Movers

Unexpected Copper Concentration Sends Shares of this Junior Miner Higher
Biotech Steals The Show Following Pre-Clinical Data Announcement
Micro Cap Up Big Following Acquisition Rumor
Most Popular
FREE Newsletter
AllPennyStocks.com Favorites


Back to Top