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Merger deal brightens juniors' horizons

Backed by Americas Bullion Royalty, Redtail Metals joins Northern Tiger Resources to protect interests, explore Yukon projects

Striving to mix up a batch of lemonade from the unrelenting string of lemons dished out recently by the chronically depressed capital markets, three junior mining companies with promising assets in Yukon Territory are joining forces to protect those interests and pave the way for continued exploration.

Redtail Metals Corp. and Northern Tiger Resources Inc. are merging their interests and acquire the Yukon assets of Americas Bullion Royalty Corp. (formerly Golden Predator Corp.) in a multifaceted transaction that will produce a newly created and capitalized entity to be led by Northern Tiger President Greg Hayes.

Hayes will be advised by a board of directors comprised of two members each nominated by Redtail and Northern Tiger and two members nominated by the new company.

Having shed its extensive portfolio of advanced and grassroots exploration projects in the Yukon and its Nevada mineral assets, Americas Bullion, meanwhile, is undertaking an extensive corporate reorganization on a different path altogether, while retaining a substantial interest in the new Yukon explorer.

William Sheriff, president and CEO of Americas Bullion and interim CEO of Redtail Metals, outlined the companies' strategy recently in a letter to Americas Bullion shareholders.

"It is our belief that the markets may have bottomed, but we have no expectation for a broad or swift recovery. When the recovery comes it will not come to the entire sector, but only to those with significant cash flow opportunities, either producing or near-term producers, with reasonable cost structure and sound management. Simply put, even when the recovery comes, funds for investment in our sector will be selective and risk-averse at best," Sheriff told the company’s shareholders in the Jan. 9 letter.

"In our opinion, the traditional model of the past 30+ years for financing in the junior mining sector is broken, perhaps irreparably. On the other hand, the mining industry must continue, as there will be an ever-increasing demand for metals," he continued.

As a result, Americas Bullion, Redtail and Northern Tiger set in motion a series of transactions beginning in late October that will result in Americas Bullion leaving the mining sector and instead, delving into the re-insurance, royalty and equity holdings businesses. Redtail and Northern Tiger will merge with Northern Tiger the surviving entity, but under a new name, Golden Predator Mining Corp.

Basically, to get from point A to point B, the three companies took the following actions:

Americas Bullion agreed to sell Brewery Creek and other Yukon assets to Northern Tiger Corp., which is merging with Redtail Metals, while also making a US$2.25 million investment in the company. Further, the company sold its Springer Mine and Mill and other Nevada assets to Silver Predator Corp., while also making an investment in that company.

"We will be slated to receive in excess of US$10 million in installment payments for these assets over a three-year period, as well as retaining 43 royalty interests," Sheriff said.

Both companies will have key advanced projects with compelling resources and reasonable capital requirements.

Sheriff said the moves significantly reduce the expenditures, cash requirements, overhead and administrative costs of Americas Bullion, while maintaining controlling interests of Silver Predator Corp. and the new Golden Predator Mining Corp.

Americas Bullion, meanwhile, agreed to acquire Resource Holdings Ltd., a Bermuda corporation, for US$1.3 million. Resource Holdings owns all of the issued and outstanding shares of Resource Re Ltd., a Bermuda corporation, which holds a Bermuda Class 3A insurance license and cash of US$1 million.

Americas Bullion also agreed to acquire the securities portfolio of Kudu Partners LP (Kudu), a private hedge fund founded and managed by William (Bill) A. Lupien. Kudu's securities portfolio is valued at about US$21 million.

"I will remain as chairman and chief executive officer with negotiations underway to see Bill Lupien direct the management of the company's securities portfolio. For those unfamiliar with Bill Lupien, he is known as an innovator and a successful investor and fund manager. The acquisition of the Kudu portfolio and active involvement of Bill Lupien will greatly enhance our position for future growth," Sheriff said.

Americas Bullion will complete a 1:100 stock consolidation as the company reorganizes under Resource Holdings Ltd.

"This will create a tight share structure and a share price that should provide us with the opportunity to obtain a U.S. listing and have broader market appeal. A name change is also being contemplated," Sheriff added.

After these transactions are completed, Americas Bullion will hold roughly US$33+ million in cash, marketable securities and illiquid securities, plus more than 50 percent equity interest in Silver Predator Corp. and Golden Predator Mining Corp .; 100 percent ownership of Resource Re Ltd .; 55 royalty interests including deeded and option-related royalties; the Carlin Vanadium Project in Elko County, Nevada; about 12 percent of Wolfpack Gold; and about 157 ounces of gold bullion.

Golden Predator Mining Corp. will have more than US$2 million in cash, along with the Brewery Creek, 3Ace, Grew Creek, Marg and Clear Lake projects as well as other significant Yukon properties.

The proposed transactions are subject to a number of conditions, including approval of the Toronto Stock Exchange.

Promising Yukon property portfolio

For the combined Yukon assets, the future appears brighter with the prospect of a new, better capitalized junior mining company ready to resume exploration in the wake of the two very lean years experienced by its predecessors.

Though cash-strapped, Northern Tiger has its own strong portfolio of projects.

At the company's flagship 3Ace Project in southeast Yukon, drilling has intersected 4.6 grams per metric ton gold over 35.0 meters (including 106.2 g/t gold over 1.0 meters).

Northern Tiger optioned the 3Ace Property in April 2010 from Alex McMillan, a longstanding Yukon prospector who discovered a quartz vein on the property containing abundant quantities of free gold.

The 3Ace Project hosts extensive gold-in-soil anomalies over nine square kilometers and includes numerous high-grade gold showings. The majority of drilling on the project has focused on the Main Zone where results have included up to 4.6 g/t gold over 35.0 meters, including 106.2 g/t gold over 1.0 meter in 2011. Gold mineralization at the Main Zone has a drilled strike length of 220 meters and is related to a steeply dipping shear zone which hosts an en echelon array of vein segments linked by stockwork veins and breccias.

In 2013, Northern Tiger conducted a phase one program consisting of trenching, soil and rock sampling, mapping and prospecting focused on developing specific drill targets on some of the property's extensive soil anomalies that have seen little or no drill testing to-date. A limited diamond drilling program planned for later in the season was postponed due to lack of capital.

"Northern Tiger Resources' ( continued work on its 3Ace property (Yukon MINFILE number pending) and the adjoining Sprogge property (Sugar Bowl; Yukon MINFILE 105H 103). The company spent (a modest sum) on grassroots exploration, including excavator and hand trenching, soil and rock sampling and prospecting. It also collected three 1,000-kilogram bulk samples from the Sleeping Giant zone," wrote Yukon Geological Survey geologist Patrick Sack in the Yukon government's 2013 exploration overview to be released Jan. 26.

In 2012, several blast trenches were completed on the Sleeping Giant Zone outcrops where 2012 drill results did not replicate high-grade results obtained by surface channel sampling (including 132.9 g/t gold over 6.9 meters). The coarse gold and highly variable assay results suggest a strong nugget effect which makes it challenging to determine average grades using the relatively small sample sizes obtained through channel and drill sampling. The blast trenches aimed to allow the company to process some larger sample sizes to obtain more representative average grades and to gain a better understanding of possible structural controls that may be controlling the gold grades.

The Sonora Gulch copper-gold-silver porphyry project in central Yukon also has returned significant drill results, including 0.45 g/t gold and 3.0 g/t silver over 234.0 meters. In 2013, Northern Tiger carried out a program of trenching, soil and rock sampling, mapping and prospecting, and again postponed plans for drilling due to a shortage of funds.

The junior, meanwhile, conducted small grassroots exploration programs on two additional projects, Korat and DEL. Korat, which consists of 40 Yukon Quartz Mining Claims (2,066 acres) that is completely surrounded by Comstock Metals Ltd.'s QV property hosts an 800-meter-long gold-in-soil anomaly within a larger 1,600-meter pathfinder anomaly, and DEL, located 30 kilometers (19 miles) southeast of Capstone Mining Corp.'s operating Minto Mine, has returned soil samples outlining a 400-meter by 300-meter area of anomalous copper-in-soils that remains open to the west and to the south.

Redtail Metals, meanwhile, has focused on advancing quality precious metal enriched copper, lead and zinc mineral deposits in Yukon. The company currently controls the Marg and Clear Lake massive sulfide deposits, both with resources prepared in accordance with NI 43-101.

The Marg Deposit consists of 402 quartz claims covering about 83 square kilometers (32.4 square miles) located about 40 kilometers (25 miles) east of Keno City.

The Marg Deposit covers the polymetallic Marg volcanic-hosted massive sulphide deposit with an indicated resource of 3.96 million metric tons of 1.57 percent copper, 1.92 percent lead, 3.90 percent zinc, 49.40 g/t silver, and 0.79 g/t gold, and an inferred resource of 7.78 million metric tons of 1.12 percent copper, 1.36 percent lead, 2.89 percent zinc, 34.88 g/t silver, and 0.52 g/t gold.

The deposit is open to expansion down plunge to the east, down dip to the south, and along strike to the west. The property also has untested exploration targets with significant geochemical signatures in favorable stratigraphy

The Clear Lake Property consists of 121 quartz claims covering about 25 square kilometers (9.65 square miles). It is located about 75 kilometers east-southeast of Pelly Crossing, and about 95 kilometers northeast of Carmacks.

In 2009, SRK Consultants completed an NI 43-101-compliant resource estimate for the Clear Lake Property outlining an inferred resource of 7.65 million metric tons of 7.6 percent zinc, 1.1 percent lead and 22.0 g/t silver, using a 4 percent (lead + zinc) cut-off

Grew Creek Project acquisition

In conjunction with the merger, Redtail Metals and Northern Tiger agreed in late October, to purchase from Americas Bullion all of that company's interest in the Grew Creek gold project and related drill and core data for an aggregate purchase price of C$900,000, and complete a financing to raise a minimum of C$324,000 and a maximum of $450,000.

The Grew Creek Project is located in Yukon Territory 32 kilometers (20 miles) southwest of Faro and 24 kilometers 15 miles) northwest of Ross River. The property's 135-square-kilometer (52 square miles) area encompasses 666 quartz claims, extending along both sides of the Robert Campbell Highway for about 27 kilometers (17 miles), with power lines traversing the project area.

Americas Bullion holds an option to earn a 100 percent interest in the Grew Creek project, subject to a 4 percent net smelter returns royalty in favor of the optionor. Americas Bullion has satisfied the minimum C$3 million exploration expenditure requirement under the terms of the option agreement and will acquire a 100 percent interest upon making a final cash payment of C$100,000.

"These transactions will consolidate a number of strong Yukon properties into one company, including two promising high-grade gold projects in the southeast Yukon - 3Ace and Grew Creek," said Hayes, who will serve as president and CEO of Golden Predator Mining. "Given the challenging markets for junior explorers, we are also very pleased to emerge with a strong and supportive major shareholder in Americas Bullion."

The deal also includes a $2.25 million investment by Americas Bullion in the merged company.

Sheriff said Redtail Metals was looking forward to combining the strengths of the two companies into a revitalized entity that is focused on two of the higher grade gold projects in the southeast Yukon, while also continuing to hold our deposits at Marg and Clear Lake. "Under our Kaska Cooperation Agreement, we will work to create benefit for our collective shareholders and Yukoners alike," he pledged.

The Grew Creek purchase closed in December as the companies reported plans to expand the merger to include acquisition of all of the Yukon assets held by Americas Bullion, including the Brewery Creek Project and Americas Bullion's accumulated tax losses, for a purchase price equal to US$5.25 million and the grant by Northern Tiger to Americas Bullion a royalty interest in each of its properties held at closing.

Northern Tiger will satisfy the purchase price in part by the issue to the new company, at closing, of such number of Northern Tiger shares having an aggregate value of US$550,000 and a convertible promissory note in the principal amount of $4.7 million bearing interest at 6 percent per annum and payable over a period of three years. The balance of the purchase price will be satisfied by the grant to Golden Predator Mining of a royalty interest in each of its properties held at the closing of the Americas Bullion acquisition.

Brewery Creek is the most advanced project among Americas Bullion's Yukon assets.

"Of the extensive Yukon claim package that Golden Predator accumulated over the past few years, the focus in 2013 was on the past-producing Brewery Creek gold mine (Yukon MINFILE 116B 160). The 2013 resource estimate for the property (based on 2012 drilling) doubled the contained ounces of gold in the oxide ore and added approximately 30 percent to the sulphide ore (Table 2), revision of the mine plan also includes crushing of ore which has increased gold recoveries by 30 percent (May 5, 2013 News Release)," Sack wrote in the annual overview.

"The original Brewery Creek mine didn't crush leach pad material because of the high cost of an onsite generator; however since the mine closed in 2001, the Mayo-Dawson transmission line has been completed, and grid power is now within 15 kilometers of the mine site. Work also continues on a preliminary feasibility study, amending the Quartz Mining and Water licenses, and preparing for submission to the YESAB Executive Committee," he added.

Hayes said, "We are excited to add Brewery Creek, a previously operating gold mine with significant oxide resources, to our portfolio of promising properties, including 3Ace and Grew Creek. The financing provided by (Americas Bullion) means we are well-funded to continue advancing our projects, while seeking a joint venture partner for Brewery Creek as we continue to move it through the mine permitting process."

Upon completion of the merger and related transactions, it is anticipated that the newly created Golden Predator Mining will hold up to 54 percent of the outstanding shares of Northern Tiger and will be a "control person" of Northern Tiger (as such term is defined in the policies of the TSXV) at closing.

It is intended that, immediately following closing, the new company will distribute to its shareholders sufficient Northern Tiger shares to reduce its post-merger share position in Northern Tiger to 49 percent of the outstanding Northern Tiger shares.

Accordingly, it is anticipated that upon completion of this distribution by Golden Predator Mining, current Northern Tiger shareholders will hold as a group 30 percent of the merged company and current Redtail Metals shareholders will hold as a group, 17 percent of the merged company.

The transactions are subject to a number of other conditions, including the approvals of the TSX.


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