A platform for future growth
The prospective gold producer Tucano Gold wants to go public via a so-called reverse takeover. The plan is to merge with Golden Shield Resources (CSE GSRI), which is also active in Brazil.
Following the planned merger, the new company would thus have both the exploration potential of the Marudi Mountain gold project in southwest Guyana and the high-grade Tucano gold mine project (Mina Tucano) in Brazil, which is close to production.
“Geologically, Marudi and Tucano are located in the same underexplored gold belt, and the resulting company will have a major knowledge, operational and strategic advantage in the search for future discoveries,” said Leo Hathaway, Chairman of the Board of Directors of Golden Shield, explaining one of the reasons for the pending deal.
A good fit
Tucano’s CEO Jeremy Gray added that the two companies would be a good fit. “The combination will help unlock the exciting potential of Golden Shield’s exploration projects in Guyana and provide a platform for future growth as Mina Tucano begins to generate significant cash flow against a backdrop of record gold prices,” Gray also explained.
The proposed transaction is expected to be structured as a reverse takeover. Pursuant to a letter of intent, the securities of Golden Shield will be consolidated on a 10:1 basis and each Tucano shareholder will receive one Golden Shield common share in exchange for each of their own common shares. The exchange ratio implies a value of $0.08 per Golden Shield share and $0.80 per Tucano share.
Assuming the transaction is completed as planned, Golden Shield shareholders would hold 12.9% and Tucano shareholders 87.1% of the common shares of the new company – before additional capital increases. It is expected that the new company will ultimately have 55 million outstanding and issued shares.
The IPO is taking place in a very positive environment for gold producers. The precious metal is still trading at almost USD 2,400 per ounce.
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According to §34b WpHG and § 48f Abs. 5 BörseG (Austria) we would like to point out that GOLDINVEST Consulting GmbH and/or partners, principals or employees of GOLDINVEST Consulting GmbH hold shares of Tucano Gold and therefore a conflict of interest exists. GOLDINVEST Consulting GmbH also reserves the right to buy or sell shares of the company at any time. Furthermore, GOLDINVEST Consulting GmbH is remunerated by Tucano Gold for reporting on the company. This is another clear conflict of interest.
