Montage acquires African Gold for $170M

[Ben Graham]

Montage Gold (TSX: MAU) is acquiring Australia’s African Gold (ASX: A1G) in a move that expands the company’s presence in Côte d’Ivoire and adds nearly 1 million oz. of inferred resource to its portfolio. The news sent Montage’s stock to a new high.

Under an Australian court-approved scheme of arrangement entered on Friday, Montage will acquire all the shares of African Gold that it does not currently own for 0.0628 of its own common share. This share exchange ratio implies a A$0.50-per-share acquisition price, representing a 54% premium to the 10-day volume-weighted average price and an implied transaction value of $170 million.

Upon completion, African Gold shareholders will own approximately 27.7 million or 7.1% of Montage’s shares.

Montage opened Friday’s session higher following the morning announcement, and shortly after surged to an all-time high of C$8.35 a share in Toronto. By Midday, it traded 5.3% higher at C$8.30 with a market capitalization of almost C$3 billion ($2.1 billion).

Côte d’Ivoire footprint

The acquisition strengthens Montage’s presence in Côte d’Ivoire with the addition of African Gold’s Didievi project, which is in the early exploration stage with an inferred resource estimate of 12.4 million tonnes grading 2.5 grams per tonne gold, containing 989,000 oz. of gold.

Montage has already been operating the project after entering a partnership with African Gold in March, from which it acquired a roughly 17.3% stake in the Australian junior. Since then, it has gained a significant understanding of the project’s exploration upside and potential to become a standalone operation, the company said in a press release.

The transaction, it added, would be “accretive” to its flagship Koné project, which is already in the construction stage and is expected to enter production in 2027. According to a feasibility study published in 2024, Koné has an estimated mine life of 16 years, with annual production projected at more than 300,000 oz. for the first eight years.

“With the build of our Koné project tracking on budget and well on schedule, we are pleased to further enhance our portfolio through the addition of the high-quality Didievi project, thereby strengthening our presence in Côte d’Ivoire,” Martino De Ciccio, CEO of Montage, stated.

Recently, Montage announced a significant increase in the Koné resource after incorporating this year’s drilling results. The indicated resources now stand at 269 million tonnes grading 0.63 g/t for 5.5 million oz. of contained gold, a 13% increase from the 2024 feasibility study.