ATAC Resources (ATC: TSXV) hit its highest level since February after announcing an earn-in agreement with Barrick Gold. The long-time Yukon explorer has been building momentum for weeks and today put out one of the most significant press releases on the TSX Venture in 2017. Whenever the world’s largest gold miner makes its way into the title of a junior gold stock press release on the TSX Venture, investors stop and read.
ATAC Resources announced Monday that,
“The transactions consist of a potential total investment by Barrick of approximately $63.3 million, which includes a private placement of $8.3 million and a two staged, $55 million exploration earn-in option to acquire up to 70% of the Orion Project.”
This investment by Barrick represents validation for ATAC Resources shareholders and the need for large producers to pay serious money for exploration projects with upside. These types of transactions simply were not happening between 2012 and early 2016. With economic gold deposits becoming harder to find and the metals price stable in the $1,250 range, majors may be preparing to go on a buying spree. Monday was a perfect example as the news spurred buying in dozens of junior gold companies. While the VanEck Vectors Junior Gold Miners (GDXJ) moved 0.60% higher to close at $36.78, some individual gold stocks broke out.
The TSX Venture moved higher for its third straight day to close at 825.04. The exchange had its biggest volume day in almost a month as 107,741,605 shares exchanged hands.
ATAC Resources and Barrick Gold Enter Transaction for Rackla Gold Property
ATAC Resources announced this morning that it has entered into a transaction with Barrick Gold (NYSE: ABX) (TSX: ABX) under which Barrick can acquire an interest in the central portion of ATAC’s Rackla Gold Property and make an $8.3 million investment in ATAC.
Below are the highlights of the transactions:
- “Stage one of the earn-in requires Barrick to incur exploration expenditures of $35 million over five years to acquire a 60% interest in the Orion Project;
- Stage one expenditures include a $10 million guaranteed exploration commitment over the first three years;
- Stage two of the earn-in requires Barrick to incur exploration expenditures of an additional $20 million to acquire an additional 10% interest in the Orion Project (for an aggregate 70%);
- One or more senior members of the Barrick exploration team will be seconded to the Orion Project and provide technical assistance and expertise to ATAC;
- A flow-through private placement under which ATAC will receive total proceeds of $8.3 million. Barrick will increase its shareholding in ATAC from approximately 9.2% to 19.9% and will have the right to maintain this interest in ATAC; and,
- The flow-through placement proceeds will be used by ATAC to partially fund the previously announced $10 million, 2017 exploration program at the Osiris and Rau Projects which are not subject to the Barrick Earn-in Agreement.”
ATAC’s President and CEO Graham Downs commented,
“We view the Earn-in Agreement and related private placement with the world’s largest gold producer as a significant endorsement of the Rackla Gold Property, the ATAC exploration team and the Yukon as a region with world-class gold potential. The placement funds, together with access to Barrick’s expertise will help accelerate ATAC’s exploration and development work over the entire Rackla Gold Property.”
Click here to read the entire press release.
April’s Stock Challenge Reflects Strong Venture Exchange
With the Top 25 competitors in April’s Stock Challenge already with double digit returns, the markets have not backed down despite the seasonally weak period.
Brand new Pinnacle member ‘Pineros‘ whose sector of interest is mining selected ATAC Resources for April’s Stock Challenge. Amazingly, he also selected Constantine Metal Resources (CEM: TSXV) which gapped up 25% Monday – the only stock to outperform ATAC. Needless to say, Pineros soared up the ranks from off the radar to 8th place overall with a 16.97% return in April’s Stock Challenge.
Back in 2011 or 2012 many competitors would have chosen ATAC as one of their selections. The fact Pineros is the only member of more than 250 to choose them is symbolic of just how forgotten some of these juniors, particularly those operating in the Yukon, have become. Sentiment is already changing and will continue. Goldcorp led the renewed interest following its takeover of Kaminak last year. Now, Barrick has shown its hand towards the region famous for the gold rush of the 1890s. If one thing is certain, ATAC Resources will not be the last junior given the nod by a major in this region of Canada. There will be more buyouts, acquisitions and earn-in agreements in the Yukon before this cycle ends.