McEwen Mining ( MUX ) , a Nevada-based gold and silver producer, has announced an acquisition of a junior gold miner, Timberline Resources ( TLRS ) . This move comes amid a surge in mergers and acquisitions within the gold sector, driven by increased gold prices and companies seeking synergies to enhance their operations.

“The merger with McEwen Mining ( MUX ), at an attractive premium to Timberline’s current trading price, provides our shareholders with continued exposure to Timberline’s assets as part of a more diverse growth-oriented platform. The combination should also unlock synergies between the Gold Bar mine and our Eureka project," stated Timberline's President and CEO, Patrick Highsmith.

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Under the terms of the agreement, Timberline shareholders will receive 0.01 of a share of McEwen’s common stock for each share of Timberline’s stock. This exchange ratio represents a value of $0.102 per Timberline share, reflecting a 132% premium over Timberline’s 20-day volume-weighted average price on the over-the-counter OTCQB exchange.

Upon closing, McEwen expects to issue approximately 1.84 million shares, with a total transaction value of $18.8 million. The merger has received the endorsement of Timberline’s board of directors and support from directors, officers, and principal shareholders, representing approximately 40% of Timberline’s outstanding shares.

McEwen Mining ( MUX ) is a well-established gold, silver, and copper producer, operating mines in Nevada, Canada, Mexico, and Argentina. Timberline, on the other hand, is a young exploration company. Its flagship asset is the Lookout Mountain Project, situated within Nevada’s prolific Battle Mountain-Eureka Trend. The project boasts a high-grade gold zone embedded within a substantial resource base, making it a highly prospective asset.

This merger will benefit both companies as Timberline becomes part of a larger, established company. At the same time, McEwan will expand its presence in a lucrative market in northern Nevada, which Barrick's CEO Mark Bristow recently characterized as "far from a mature district."

The transaction is expected to close in the third quarter of 2024, pending approval from a majority of Timberline shareholders and other customary closing conditions. Cormark Securities is Timberline’s financial advisor, while Davis Graham & Stubbs is its legal advisor.

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