Why it’s up more than 10% today

  • The stock price of Gold Standard Ventures Corp. (NYSE: GSV) rose more than 10% pre-market today. That is why.

The stock price of Gold Standard Ventures Corp. (NYSE: GSV) rose more than 10% pre-market today. Investors respond positively to Orla Mining Ltd. (NYSE: ORLA) and Gold Standard Ventures announcing that they have entered into a definitive agreement whereby Orla will acquire all of the issued and outstanding shares of Gold Standard by way of a plan of arrangement.

Gold Standard’s key asset is the 100% owned South Railroad Project, a feasibility-stage open-pit heap leach project located on the prolific Carlin Trend in Nevada. And in February 2022, Gold Standard completed a robust feasibility study and licensing activities are currently underway. Gold Standard also owns the Lewis Project, a large set of potential lands strategically located on the Battle Mountain trend in Nevada.

Under the terms of the agreement, Gold Standard shareholders will receive, in exchange for each share of Gold Standard common stock held, 0.1193 shares of Orla common stock and C$0.0001 (the consideration). The consideration involves a purchase price of C$0.655 per Gold Standard share, or gross consideration of C$242 million, and represents a 35% premium based on Gold Standard and Orla’s stock closing at the Toronto Stock Exchange (TSX) on June 10. , 2022, and a 35% bonus based on Gold Standard’s 10-day volume-weighted average (VWAP) price on the TSX for the period ending June 10, 2022. Existing shareholders of Orla and Gold Standard will own approximately 87% and 13% of the company pro forma, respectively, following the closing of the transaction.

Acquisition Highlights:

— Continues Orla’s strategy of creating value for all stakeholders by responsibly building and operating high-margin mines in stable jurisdictions with superior geology.

— South Railroad is a low complexity, feasibility stage project with robust project economics and is analogous to the recently completed Camino Rojo oxide mine.

— South Railroad, combined with the Camino Rojo oxide mine and Orla’s strong organic growth pipeline in Mexico and Panama, sets the stage for annual gold production of 500,000 ounces at all-in cost margins among the best in the industry.

– Entering Nevada with extensive and highly prospective land positions in the Carlin and Battle Mountain trends to underpin a long-term base of operations.

— Increases Orla’s proven and probable reserve base to 3.8 million ounces of gold and the company’s measured and indicated mineral resources to 12.3 million ounces of gold.

— South Railroad fits within Orla’s strong pipeline of projects and is expected to be developed without further equity dilution for Orla shareholders.

Benefits for Gold Standard shareholders:

— Immediate initial premium of 35%.

— Continued exposure to future stages of value creation at South Railroad and Lewis, and Orla’s strong portfolio of high-quality production and development assets.

— Participation in an established gold producer with proven construction capabilities, a solid exploration history and an industry-leading low-cost growth profile.

— Significantly improved financial strength, cash flow generation, tracking of institutional investors, trading liquidity and opportunity for inclusion in the index.

— Utilizes Orla’s leadership and expertise in the construction and operation of the Camino Rojo oxide mine, an open-pit heap leach operation with similar engineering characteristics to the South Railroad project.

— Provides access to a strong balance sheet and strong cash flow generation to fund the construction of South Railroad and future exploration initiatives with reduced dilution, financing, development and execution risk.

About the South Railroad and Lewis Projects:

South Railroad is a high quality open pit heap leach project with a strong economics. And the main highlights of the project, as described in the February 2022 feasibility study, include:

— Average annual gold production of 152 kozs over the first 4 years and 124 kozs1 over the life of mine

— Average all-in life-of-mine sustaining cash cost of approximately US$1,020 per ounce of gold

— Total gold production of 1.0 million ounces over an 8-year mine life

— Initial capital of US$190 million

— Average annual free cash flow of US$98 million over the first 4 years2

— $315 million net present value after tax at a discount rate of 5%2

— After-tax internal rate of return of 44%

— Estimated proven and probable reserves of 1.6 million ounces of gold at 0.77 g/t

— Measured and indicated resource estimate of 1.8 million ounces of gold at 0.74 g/t

The South Railroad clearance is currently progressing to a U.S. Bureau of Land Management Record of Decision.

South Railroad is located within a 21,000 hectare prospective land package that provides future opportunities for resource expansion and conversion and the discovery of new deposits. And major oxide and sulphide exploration targets include Pinion SB, Jasperoid Wash, Dixie, LT, POD/Sweet Hollow and North Bullion.

The Lewis Project is strategically located adjacent to the north and within the mine plan limits of Nevada Gold Mines’ Phoenix operation. And the Lewis project has an inferred mineral resource of 206,000 ounces of gold at 0.83 g/t and several additional potential targets that have the potential to expand the resource base.

Board recommendation:

The Arrangement Agreement has been unanimously approved by the Board of Directors of Orla and Gold Standard. Gold Standard’s board of directors recommends that Gold Standard shareholders vote in favor of the transaction.

TD Securities has provided a fairness opinion to the board of directors of Gold Standard stating that as of the date of such opinion and subject to and subject to the assumptions, limitations and qualifications set forth in such opinion, the counterparty to be received by Gold Standard shareholders in the Transaction is fair, from a financial point of view, to Gold Standard shareholders.

Paradigm Capital has provided a fairness opinion to a special committee of directors of Gold Standard stating that as of the date of this opinion, and subject to and subject to the assumptions, limitations and qualifications set out in this opinion, the counterparty to receive by Gold Standard shareholders in the transaction are fair, from a financial point of view, to Gold Standard shareholders.

Trinity Advisors Corporation and Stifel GMP have provided fairness opinions to the board of directors of Orla, each representing that as of the date of such opinions, and based on and subject to the assumptions, limitations and qualifications set out in such opinion , the consideration to be paid in connection with the Transaction is fair, from a financial point of view, to Orla.

Officers and directors of Gold Standard, as well as a key Gold Standard shareholder, Newmont, representing in the aggregate approximately 5.7% of Gold Standard’s issued and outstanding shares, have entered into voting support agreements with Orla and have agreed to vote in favor of the Transaction.

Acquisition structure

The transaction will be effected by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia) and will require the approval of (i) 66⅔% of the votes cast by Gold Standard shareholders , (ii) 66⅔% of the votes cast by holders of Gold Standard securities (composed of shareholders, option holders and holders of restricted stock units) voting as one class, at a meeting of holders of Gold Standard securities, and (iii) a simple majority of the votes cast by Gold Standard shareholders, excluding certain related parties as required by NI 61-101.

This meeting of Gold Standard is expected to take place in August 2022. And an information circular regarding the transaction will be filed with regulatory authorities and mailed to securityholders of Gold Standard in accordance with applicable securities laws. The deal is expected to be finalized in August 2022 after the Gold Standard Meeting.

Completion of the transaction remains subject to customary conditions, including receipt of all necessary court and regulatory approvals. The Arrangement Agreement includes customary representations and warranties of each party, non-solicitation clauses by Gold Standard, “right of consideration” provisions in favor of Orla in the event of a superior proposal, a termination indemnity in favor of of Orla in the amount of C$7.3 million if the Arrangement Agreement were to be terminated in certain circumstances.


“This acquisition advances our strategy of creating stakeholder value through the responsible construction and operation of a portfolio of high-margin, cash-generating assets with superior geological prospectivity. The South Railroad project is analogous to our recently completed Camino Rojo mine – a low capital intensive, open pit, heap leach project in a desirable location with exploration potential. We have the team, the partners and the financial resources to develop this quality asset and we are ready to go.

— Jason Simpson, President and CEO of Orla Mining

“We are excited to partner with Orla to create a premier gold producer with the potential to have multiple open-pit, low-complexity, low-cost heap leach operations in the near future. This transaction offers Gold Standard shareholders an immediate upfront premium, exposure to a well-funded gold producer and strong upside potential as Orla delivers and de-risks the combined asset portfolio. Based on their recent success in building the Camino Rojo oxide mine on time and on budget, we believe Orla is an ideal partner to bring South Railroad into production.

— Jason Attew, President and CEO of Gold Standard

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.

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