Brigus Gold Corp. (NYSE Amex, TSX: BRD) was formed by the combination of Apollo Gold and Linear Gold on June 25, 2010. Post-consolidation Brigus had about 129 million basic shares outstanding and 176 million fully diluted shares. Brigus’ most advanced asset is the producing Black Fox gold mine and mill near Timmins, Ontario, which includes the Grey Fox and Pike River properties. Additional assets include the Goldfields Project (including the Box and Athona deposits) near Uranium City, Saskatchewan. Catalysts for appreciation in the next 12 months include:
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Optimizing operation of the Black Fox Operations
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Resource expansion at Black Fox, Grey Fox and Pike River
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Exposure to gold prices with reduction of gold hedge
The remaining mine life of the Black Fox mine is about eight years, with processing capacity of 2,000 tpd. The initial Black Fox project debt was US$70 million, and was estimated to be US$46 million at closing. This debt may be reduced to US$41 million to US$35 million by the end of 2010. The reduction in project financing, accelerating the reduction of the gold hedge, should also significantly increase Brigus’ financial flexibility. The original gold hedge was about 250,430 ounces of gold. The gold hedge should be reduced to about 174,000 ounces of gold at closing and to 146,000 ounces of gold by the end of 2010. The combined Proven and Probable Reserves of the two companies will total about 2,360,400 ounces of gold grading 2.3 g/t.
Investment Thesis
The improved corporate structure, increased market capitalization, share price, and U.S. listing has good potential to provide the opportunity for increased market visibility and trading volume in both Canada and the U.S. that may lead to a fuller valuation of company assets and their gold production/development/exploration potential.
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