Deal with Significant Advantages and Synergies for Both Partners

The aspiring gold producer Tucano Gold plans to go public on the Canadian stock exchange through a so-called reverse takeover. A merger is planned with Golden Shield Resources (CSE GSRI / WKN A3DJD6), which is also active in South America.

After the planned merger, the new company would thus have both the exploration potential of the Marudi Mountain gold project in southwestern Guyana and Tucano’s high-grade gold mine project (Mina Tucano) in Brazil, which is on the verge of production.

“Geologically, Marudi and Tucano are located in the same under-explored gold belt, and the emerging company will have a significant knowledge, operational, and strategic advantage in the search for future discoveries,” explained Leo Hathaway, Chairman of the Board of Directors of Golden Shield, outlining one of the reasons for the impending deal.

Tucano’s CEO Jeremy Gray added that the two companies would be a good fit. “The merger will help unlock the exciting potential of Golden Shield’s exploration projects in Guyana and create a platform for future growth as Mina Tucano begins to generate significant cash flow against the backdrop of record gold prices,” Gray further explained.

Reverse Takeover Planned

The planned transaction is expected to be structured as a reverse takeover. According to a letter of intent, Golden Shield’s securities will be consolidated at a 10:1 ratio, 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 CAD 0.08 per Golden Shield share and CAD 0.80 per Tucano share.

Assuming the transaction is carried out 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 eventually 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 nearly $2,400 per ounce.