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Montage Gold stock surges on upsized financing backed by Lundin Group

Montage Gold (TSXV: MAU) has nearly doubled the size of its recently announced private placement financing from C$20 million to C$35 million, offering 50 million common shares at a price of C$0.70 each.

The offering price represents a 4.5% premium to the closing price of Montage shares on Thursday, when the initial financing announcement was made.

On Friday morning, the stock had surged by double-digits to a new 52-week high of C$0.81, before settling back to C$0.74 around 11:30 ET for a gain of 10.5%. Its market capitalization was C$137.2 million.

As detailed in the Thursday news release, the Lundin Group is expected to participate in this financing and boost its stake in the West Africa-focused gold explorer. The initial plan was to buy C$17.8 million worth of shares to become a 19.9% shareholder.

Montage said it will use the proceeds to advance its Koné gold project, located in northwest Côte d’Ivoire, towards a construction decision, as well as to conduct further exploration on nearby targets.

Construction imminent

According to Montage, Koné represents largest and most advanced standalone gold project in the West Africa region, comprising six permitted exploration areas covering a total of 1,801 sq. km. The earliest permit (2013) centres around the large-scale Koné deposit.

The property sits in the same shear zone that hosts the Seguela gold mine, owned by Fortuna Silver 80 km to the south, and the Fonondara, Cassere and Caribou advanced-stage gold targets held by Barrick Gold to the north.

On its website, Montage said it believe this project has the potential to become the centre of gravity in new gold district with the opportunity to exploit numerous, higher-grade satellite deposits that can be trucked and processed at a central mill located adjacent to the Koné deposit.

The first satellite to be trucked is the Gbongogo Main deposit, which sits within the former Mankono-Sissédougou joint venture that Montage acquired from Barrick and Endeavour in November 2022.

In January, Montage released the results of an updated definitive feasibility study to incorporate ore from the satellite deposit. It outlined a 16-year gold project producing 3.57 million oz. of gold at all-in sustaining cost of $998 per ounce over the life of mine, with average annual production of 223,000 oz. and peak annual production of 378,000 oz.

Prior to the study, the company submitted in December an environmental and social impact assessment for the Koné project, which is on the cusp of formal validation following a public hearing. In anticipation of the approval, and subsequently its mining permit, Montage said it expects begin building the project in the second half of 2024.

Exploration is also underway to define the next satellite deposits. A key priority area is the Diouma-Gbongogo-Korotou shear zone, which is a 15-km strike length of soil anomalism where nine targets have been drill tested to some degree. The Gbongogo Main pit is located at the south end of this zone.

Source: MINING.COM – Read More