G2 Goldfields (GTWO) - Merger is Obvious Option; but When?

G2 Goldfields Inc. is a Canadian mineral exploration company focused on the advancement of its OKO project located in the Guiana Shield of Guyana. Guyana is a country on South America’s North Atlantic coast. The OKO project of the company is located in the south-eastern Cuyuni Mining District, approximately 120 km away from Guyana’s capital city, Georgetown.

The company announced on the 4th of August 2022 that it had completed the second and final tranche of its previously announced, non-brokered private placement. The non-brokered private placement resulted in the gross proceeds towards the company of approximately CAD$ 13.37 million. The ease and size of the non-brokered private placement in a difficult market can be accredited to the NI 43-101 compliant mineral resource estimate of the company which was published to SEDAR.

The NI 43-101 compliant mineral resource estimate, which the company announced had been published on SEDAR on the 1st of June 2022 shows 974,000 ounces of gold in the inferred category and a further 220,000 ounces of gold in the indicated category.

G2 Goldfields Inc. on the 19th of September 2022 released the assay results of further exploration drilling at the OKO project. The assay results include highlights as 58.0 g/t of gold over 3.7 m as well as 12.7 g/t of gold over 6.0 m. The assay results succeeded, and continue to expand the mineral resources of the project. The company plans to acquire 2 additional drill rigs, which are planned to be implemented at the project’s Ghannie and OKO North zones.

G2 Goldfields plans to update the mineral resource estimate of the OKO project by the end of Q1 2023. The company and its neighbour, Reunion Gold Corp., enjoy a good working relationship with both companies in essence advancing the same deposit in parallel. Noone explains that both companies will be able to benefit through the merging of the two deposits into a larger deposit at a later stage.

G2 Goldfields Inc. is funded for its current exploration and operational expenses with Noone explaining that the company will aim to continue expanding its drilling initiatives and may raise further funds in early 2023 with the announcement of its planned mineral resource estimate.

Recent private placement

G2 Goldfields Inc. announced on the 4th of August 2022 that it had completed the second and final tranche of its previously announced, non-brokered private placement. The non-brokered private placement which was announced by the company in June 2022 was initially aimed at raising CAD$ 10.2 million through the issuing of 17 million shares at CAD$ 0.60. The strong institutional demand enjoyed by the placement resulted in the company increasing the initial size of the non-brokered private placement. The final gross proceeds of the placement towards the company totalled approximately CAD$ 13.37 million. Dan Noone the CEO of G2 Goldfields Inc. explains that the private placement came easier to the company than anticipated, given the current market conditions. Noone accredits the success of the raise to the company’s published mineral resource estimate (MRE) of its OKO project to SEDAR. Noone explains the ease and the shareholders that entered through the private placement, as institutions that will be long-term partners.

“It was relatively easy compared to the market. There have been easier financings. However, we also did it as a private placement, so we controlled who came into the financing. It was the first time that we've allowed a big issue to happen. We wanted our large funds who could buy it now and buy it at a higher price in the future and who want to be there till the end game. All the funds that came in had more than USD$ 1 billion and have the ability to continue to stay the course. That was important to us, and we got those funds and, obviously, insiders took USD$ 1.2 million as well, so that was good. We were happy with that. No warrant on it, at a slight discount to the market and we got that done.”

The company also conducted site visits with the institutional shareholders before the raise, another aspect that counted in its favour, Noone states:

“The major funds had come down and visited the site; we had VanEck come in, Sprott Global came in, Condearie from Texas, and 1832. Three of those had been down to the site before we did the financing, so it was very much a staged process where people came, they saw what they were buying into and then we negotiated a price. It was clear and transparent, and you end up with everyone being relatively happy.”

Resource update

The NI 43-101 compliant mineral resource estimate, which the company announced had been published to SEDAR on the 1st of June 2022, was based on 98 intersecting drill holes and takes into account the S3, S4 and S5 shear zones of the OKO project to a depth of 350 m. The mineral resource estimate shows 974,000 ounces of gold in the inferred category and a further 220,000 ounces of gold in the indicated category.

“The initial resource is a high-grade resource hosted within 3 of the 5 shears to date. It goes down to 350 m depth. We had a minimum mining width of 1.5 m, and a cut-off grade of 3 g/t gold. We ended up with 1.2 million ounces at 9.3 g/t. Shear 5 at 550,000 ounces at 11 g/t, so it is a very high-grade deposit. That makes the economics extremely attractive, so we see that as something which stands alone as it is.”

The company plans to expand the mineral resource estimate through various exploration initiatives and will look at expanding the resource through exploring it at depth, as Noone explains:

“The next phase here is can you trace it down plunge? We know these greenstone deposits have great lengths to them, but we also know that once you get beneath 500 m depth, you're not going to change the scope of what you're going to build at the surface very much. Hence, we're very keen to also start hitting the targets that we see adjacent to the OKO main zone.”

The recent gross proceeds of the private placement are earmarked for expansion and exploration initiatives at the OKO project.

Recent assay results and exploration plans

G2 Goldfields Inc. on the 19th of September 2022 released the assay results of further exploration drilling at the OKO project. The assay results include highlights such as 58.0 g/t of gold over 3.7 m as well as 12.7 g/t of gold over 6.0 m. The assay results succeeded, and continue to expand the mineral resources of the project. Noone explains the intent of the company’s exploration initiatives as follows:

“The current drilling that we released today has taken this down to 450 m, so we have extended it by another 80 m-100 m, and we still want to continue with that, but we also understand that we need to hit these other targets near the surface to really move the dial on the scope of what we have here.”

G2 Goldfields Inc. plans to acquire 2 additional drill rigs, which are planned to be implemented at the project’s Ghannie and OKO North zones. The Ghannie zone of the project spans a strike length of approximately 700 m and is located between the OKO Main Zone and Reunion Gold’s Block 4 Discovery, Noon explains the zone and the company’s intent as follows:

“We have the 3 rigs doing that at the moment, so as the others come with the bigger rigs, we will take the smaller resource and start drilling Ghannie, which is to the south of us, and that's the same structure as we see at Block 4. We'll be drilling targets there. We've completed geophysics over this area so we'll drill along there with the idea that we can find near-surface, probably more disseminated and lower-grade style of mineralization like Reunion. The host rock is the same, it is magnetic basalt adjacent to an intrusive.”

The company will also conduct exploration drilling at the OKO North Zone, with Noone explaining:

“To the North, we have the OKO North, which looks more similar geophysically to OKO Main. The geochemical anomaly is 750 m x 400 m, which is a similar size to OKO Main. We'll drill that with one of the smaller rigs and we will start to link fences across that. Then, obviously, out to the west, where we go up the hill to the west of us, we'll be drilling shears 5 and 6 close to the surface, which is within the laterite and saprolite. We also have to fill in the saprolite higher up on that western ridge as well because that will form an open pit in the early days of any mine here.”

Future plans and possible merger

G2 Goldfields Inc. plans to update the mineral resource estimate of the OKO project by the end of Q1 2023. The company and its neighbour, Reunion Gold Corp., enjoy a good working relationship according to Noone, with the companies in essence advancing the same deposit in parallel. Noone explains that both companies will be able to benefit through the merging of the two deposits into a larger deposit in the future:

“We definitely act as good neighbours. We share some infrastructure, one being the road that comes in, but also when we do work with analysts and fund managers, we certainly coordinate. We visit their site, they visit ours, and we see it as one big district, as do they. We also see the potential of owning part half of a 5 million ounce deposit. Half of a 5 million ounce deposit is worth a lot more than a 2.5 million ounce deposit if you look at it that way. Basically, once we get to 5 million ounces within the two companies, you've certainly got something.”

Noone however explains that before the possibility of a merger is to be considered, both deposits firstly need to be advanced to a certain point. The combined mineral deposit according to Noone will not only be greater than the two deposits separately but will also be much more attractive for a potential gold Major.

“There is not one company in the world who wouldn't step over the line to buy that. It's a lot easier to get to half of that quickly than it is to get all the way. When you put them together, their values are a lot higher than the single assets themselves. We understand that. They understand that logic as well, and somewhere down the road here, when we both have resource calculations out, and we both hit our targets around our deposits, there will be a simple evaluation mechanism which could allow something to happen.”

G2 Goldfields Inc. is funded for its current exploration and operational expenses with Noone explaining that the company will aim to continue expanding the OKO project in the future and may raise further funds in early 2023 with the announcement of its planned mineral resource estimate.

“That could take us through possibly to next year, but if we can keep expanding with our drilling, you'd like to think we could get to the market next January/February with a new resource and with a new discovery hopefully”

To find out more, go to the G2 Goldfields website