Pilar Gold and Laiva Gold have decided to spin off our large Finnish gold mine Laiva to Pilar Gold shareholders to resume production this summer. If we can achieve our medium-term goal of 80,000 ounces per year, Laiva Gold will be the largest European pure-play gold producer. Our focus is on maximizing shareholder value, and we believe this structure will allow Laiva Gold to achieve significant value appreciation as production increases.
In November 2022, we acquired Laiva in central Finland debt-free and without creditors. The acquisition aligned with our strategy of buying large, long-life gold mines at a significant discount to replacement cost rather than building them. We acquired Laiva for C$30 million through the issuance of 30 million Pilar Gold shares at an assumed price of C$1.00/share and 10 million warrants with an exercise price of C$1.50.
In conjunction with the spin-off, Laiva Gold is launching a seed round to raise up to C$10 million at the same price of C$0.50 per share, without any promotion. The proceeds will primarily be used for restarting the Laiva mine, a partial payment to Pilar Gold, and general working capital purposes. A pre-issue market capitalization of only C$15 million offers an extremely attractive entry point for investors in Laiva Gold at a substantial discount to the company’s value.
Largest Gold Facility in Europe
Building Laiva and its 6,000-ton-per-day production facility would cost around 400 million euros and take at least three years. We are pleased with the progress the team has made in resuming production. Finland is considered one of the best mining countries in the world and consistently ranks #1 in Europe. (Fraser Institute Annual Survey 2021). A visit to Laiva is a must to understand how big this opportunity is for shareholders and why we believe this operation will have a lifespan of over 20 years.
Back in Brazil, Pilar Gold will continue to focus on modernizing our fleet at PGDM and restarting our high-grade Sertão mine, which will allow for doubling production and reducing AISC to less than $1,200 per ounce.
Laiva Gold Presentation – Seed Round – March 2023
Jeremy Gray comments: “We consider Finland to be one of the best countries to operate in the industry and have decided to spin off Laiva to Pilar Gold shareholders. We want our Laiva project to have a path to grow and access funding on its own. Laiva was commissioned in 2011, just months before the 11-year bear market for gold began. Laiva is fully built and ready to start in a hopefully much better gold price environment, which we wrote about in A Brave New World for Gold.”
Laiva has its own management team led by General Manager Jim Jackson. Jim comments: “The team has spent the last three months planning a restart during the spring and summer months when the region is blessed with long daylight hours. The time is right to finally show Laiva’s true potential.”
What Does This Mean for Pilar Shareholders?
Pilar is selling its Finnish subsidiary Laiva Gold Oy to a newly formed company, Laiva Gold Inc, for C$30 million, consisting of C$15 million in cash and 30 million Laiva shares at an assumed price of C$0.50 per share. The cash component of C$15 million will be settled through a promissory note payable to Pilar Gold with an interest rate of 5.0% and repayment over a three-year period as friendly vendor financing.
The repayment plan is tied to achieving certain production milestones and will not put Laiva under undue stress to ensure management can focus on realizing the true potential of the Laiva Gold business. We believe that previous operators suffered from too much debt, and it is important that Laiva is given the necessary space and time it needs to become a great success.
The 30 million Laiva Gold shares held by Pilar Gold will then be distributed proportionally as a dividend to Pilar shareholders registered as of April 15, 2023. There will be no promoter shares or warrants, ensuring that Pilar Gold shareholders receive the same percentage of Laiva Gold corresponding to their Pilar shareholding, representing a genuine entry opportunity.
The current private placement of Pilar Gold at a price of $1.00, which includes a warrant priced at $1.50, continues until March 31, 2023. Please note that those who subscribe to this Pilar round will also receive proportional shares of Laiva Gold. Based on the current share count of Pilar Gold of 244 million shares, Pilar shareholders will receive approximately 1 new Laiva Gold share for every 8 Pilar Gold shares.
Pilar Gold shareholders have priority in the private placement of Laiva Gold at a price of $0.50/share. We encourage you to take advantage of this opportunity to increase your stake. We also welcome new shareholders and look forward to the stock market listing in the fourth quarter of 2023.
Laiva Gold Seed Round Subscription Form – March 2023
This transaction has several benefits for Pilar Gold, Laiva Gold, and the shareholders of both companies:
Pilar Gold can focus on its Brazilian activities and opportunities in the region;
Pilar Gold receives C$15 million in cash over a three-year period;
Pilar shareholders receive free shares of Laiva Gold in proportion to their stake in Pilar Gold and have priority in participating in Laiva Gold’s capital raising;
Opportunity to build a stake in Laiva Gold at a very attractive entry value with the potential for Laiva Gold’s valuation to increase multiple times;
No promoter shares, no warrants. Everyone participates on the same terms;
We are confident that this transaction will create significant added value for the shareholders of Pilar Gold and Laiva Gold. Please do not hesitate to contact us if you have any questions. We look forward to welcoming you as a shareholder of Laiva Gold.
Best regards,
Jeremy Gray | CEO
Jeremy.Gray@PilarGold.com
Jim Jackson | Country Manager of Laiva Gold
Jim.Jackson@LaivaGold.com
