Revival scales with Mercur buy

Revival Gold has agreed to buy Ensign Minerals in a C$21.9 million all-stock deal to accelerate its path to gold oxide production in the Western USA. The transaction will bring Revival the Mercur gold project on private land in Utah, a former heap leach gold mining operation, to add to its Beartrack-Arnett project in Idaho.

Mercur was the first Carlin-type deposit identified in the Western US and was previously operated by Barrick Gold. Its location on predominately patented (private) claims in a semi-arid zone with existing infrastructure is expected to accelerate Revival's goal of becoming a mid-tier US heap leach gold producer.

A preliminary economic assessment on Mercur is to be completed early in 2025. 

Mercur provides Revival an opportunity for phased production growth from open pit heap leach operations towards 150,000ozpa, potentially growing to greater than 250,ozpa with the exploitation of Beartrack-Arnett underground mill material. An initial 75,000ozpa of production could commence within three years at Mercur, with another 75,000ozp to subsequently be added from Beartrack-Arnett.

"This deal resonates because of the oxide heap leach aspect. This gives us 2.5 times the resource in that category and creates scale. Capital is so near-term focused and tight that having the heap leach element, and more of it, is perfect for this market," Hugh Agro, chief executive of Revival Gold told Mining Journal.

The transaction increases Revival's aggregate measured and indicated resources to 2.4Moz and inferred resources to 3.8Moz for 6.4Moz in all categories, with the new resources added at an acquisition price of about US$10 per ounce in situ. "Scale is important. The bigger players are keeping an eye on what we are doing, so we understand how to position ourselves in that marketplace," said Agro.

Revival will give 1.1667 shares for each Ensign share at an implied price of 41.64c per Ensign share. Upon completion, Revival will have 174.5 million shares issued and outstanding, with Revival shareholders owning 65% and Ensign shareholders 35% of the resulting company.

Revival will continue to be led by Hugh Agro as chief executive, with Ensign's Tim Warman to become non-executive chair. Former Eldorado Gold COO Norm Pitcher has also been nominated as a director by Ensign. The transaction also brings Revival additional institutional shareholders, such as Sun Valley Gold.

The transaction is due to close towards the end of May following a vote by Ensign shareholders, of which 27% have expressed their support. Revival plans to undertake a C$7 million financing concurrent with the transaction, increasing its treasury to C$8 million, sufficient to complete its work programmes into 2025.

Next steps

Revival plans to hit the ground running by advancing Mercur to a preliminary economic assessment with a target date of the March quarter of 2025. "Our team recently completed a prefeasibility study for Beartrack-Arnett, and they can take that knowledge and experience to Mercur. The engineering work, design, metallurgy and equip selection for a heap leach operation is a relatively simple process. This transaction is right up the ally of our team," said Agro.

With Mercur being six hours by road from Beartrack-Arnett, Revival anticipates achieving management, G&A, operational and public market efficiencies, and leveraging cross-project experience and expertise to collaborate on studies, permitting, and project de-risking.

In addition to starting the column tests on mineral samples, Revival also plans to digitise the extensive paper-based Mercur geological database from its prior operation.

"We did this with Beartrack-Arnett, and so we have the QA-QC protocols in place to incorporate that information and model it to have a clear picture before starting the engineering aspects. It should also help us identify exploration opportunities to add to the story and expand Mercur," said Agro.

Shares in Revival Gold are trading at 38c, valuing the company at C$42 million.