GoldMining Options The Almaden Property to NevGold for $16.5mn

(GoldMining, 14.Jun.2022) — GoldMining Inc. (TSX: GOLD) (NYSE American: GLDG) entered into an option agreement (the “Option Agreement“) with NevGold Corp. and its subsidiary (“NevGold“; (TSXV: NAU) whereby NevGold’s subsidiary may acquire a 100% interest in the company’s Almaden Project, located in Idaho, U.S.A. The Agreement provides for total cash and/or share consideration to the company from NevGold of up to C$16.5mn, which is comprised of initial consideration of C$3 million, additional payments of C$6.0mn to exercise the Option and further contingent payments of up to C$7.5mn tied to success-based project milestones.

  Key Option Agreement Highlights

  • On closing, NevGold will issue 4,444,444 common shares of NevGold (the “NevGold Shares“) to GoldMining representing C$3mn of value at a price equal to C$0.675 per share, representing approximately 10.6% of the outstanding NevGold Shares as of the date hereof;
  • GoldMining will subscribe for an additional $1 mn of NevGold Shares at $0.675/share for 1,481,481 common shares on closing of the Option Agreement, and commits to a further lead order in a future financing by NevGold completed by 30 November 2022 in an amount to the lesser of C$1.25mn and 40% of the total gross proceeds raised by NevGold in the Financing;
  • In order to exercise the option, NevGold must make the following additional payments to GoldMining’s subsidiary in cash and/or NevGold Shares (based on a 30 day VWAP): 
    • 1 January 2023: C$1.5mn
    • 1 July 2023: C$1.5mn
    • 1 January 2024: C$3.0mn
  • To exercise the Option, NevGold must also make qualifying expenditures on the Project totalling C$2.25mn:
    • $1.5mn on or before 1 June 2023
    • $0.75mn on or before 31 December 2023
  • Upon satisfying the total C$9.0mn in cash and/or share payments and completing C$2.25mn in qualifying expenditures by 1 January 2024, NevGold would own 100% of the Project
  • Additionally, NevGold is required to make success-based contingent payments totalling up to C$7.5mn to GoldMining, payable in cash or shares at the election of NevGold:
    • C$0.5mn on completion of a positive Preliminary Economic
      Assessment
    • C$2.5mn on completion of a positive Preliminary Feasibility Study
    • C$4.5mn on completion of a positive Feasibility Study

Alastair Still, CEO of GoldMining, commented, “In March 2020 with gold near $1,620/oz, we acquired the Almaden project for C$1.15mn, and currently Almaden represents only 3% of our current overall resource base.  Today’s transaction with NevGold for total consideration of C$16.5mn, represents a significant return for our shareholders and demonstrates the substantial value embedded in our large resource portfolio which was acquired for the most part when gold was less than $1,350/oz and copper near $2/lb.  The structure of this deal with NevGold presents a ‘win-win’, providing us with exposure to the future success and upside potential of the Almaden Project and providing NevGold with a new strategic investment.  Furthermore, through our strategic investment and NevGold Share consideration, we have additional exposure to work conducted by NevGold to advance its portfolio of assets in the region, including its active exploration drilling at Limousine Butte in Nevada.”

The Option Agreement

Pursuant to the Option Agreement, on closing of the transaction, GoldMining will grant a subsidiary of NevGold an option to acquire a 100% interest in the project for initial consideration for such grant of C$3.0mn, which will be satisfied through the issuance of 4,444,444 NevGold Shares. Pursuant to the option, in order to acquire the project, NevGold must: (i) make additional payments of C$6mn to the company, payable in cash and/or NevGold Shares, at the election of NevGold; and (ii) complete qualifying expenditures of C$2.25mn at the project during an exercise period ending January 1, 2024. The Option Agreement provides for additional contingent payments of up to C$7.5mn by NevGold, payable in cash and/or NevGold Shares, at the election of NevGold. In the event that any of the foregoing payments are satisfied through the issuance of additional NevGold Shares, the number of such shares will be based upon the volume weighted average price of the NevGold Shares for the applicable 30-trading day period.

Strategic Investment

In addition, concurrently with the closing of the option grant, GoldMining will make a strategic investment in NevGold by subscribing for 1,481,481 NevGold Shares at a price of C$0.675 per NevGold Share for total subscription proceeds of C$1mn. Under the Option Agreement, GoldMining has agreed to purchase additional NevGold equity in an amount to the lesser of C$1.25 mn and 40% of the total gross proceeds raised by NevGold in the event NevGold completes a qualifying financing prior to 30 November 2022. In connection with the transaction, on closing, the parties will enter into an investor rights agreement on customary terms, which provides for, among other things, the grant of certain anti-dilution rights by NevGold to GoldMining and the right to nominate one board member of NevGold, provided the company maintains an equity interest in NevGold above 4.9%.

Closing of the Option Agreement is expected to occur in June 2022 and is subject to customary regulatory approvals. Upon closing, GoldMining is expected to own approximately 10.6% of the outstanding NevGold Shares based on the number of NevGold Shares issued and outstanding as of the date hereof.

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