McEwen Mining (NYSE:MUX), a Nevada-based gold and silver producer, has announced an acquisition of a junior gold miner, Timberline Resources (OTCQB:TLRS). This move comes amid a surge in mergers and acquisitions within the gold sector, driven by increased gold prices and companies seeking synergies to enhance their operations.

"The merger with McEwen Mining, at an attractive premium to Timberline's current trading price, provides our shareholders with continued exposure to Timberline's assets as part of a more diverse growth-oriented platform. The combination should also unlock synergies between the Gold Bar mine and our Eureka project," stated Timberline's President and CEO, Patrick Highsmith.

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Under the terms of the agreement, Timberline shareholders will receive 0.01 of a share of McEwen's common stock for each share of Timberline's stock. This exchange ratio represents a value of $0.102 per Timberline share, reflecting a 132% premium over Timberline's 20-day volume-weighted average price on the over-the-counter OTCQB exchange.

Upon closing, McEwen expects to issue approximately 1.84 million shares, with a total transaction value of $18.8 million. The merger has received the endorsement of Timberline's board of directors and support from directors, officers, and principal shareholders, representing approximately 40% of Timberline's outstanding shares.

McEwen Mining is a well-established gold, silver, and copper producer, operating mines in Nevada, Canada, Mexico, and Argentina. Timberline, on the other hand, is a young exploration company. Its flagship asset is the Lookout Mountain Project, situated within Nevada's prolific Battle Mountain-Eureka Trend. The project boasts a high-grade gold zone embedded within a substantial resource base, making it a highly prospective asset.

This merger will benefit both companies as Timberline becomes part of a larger, established company. At the same time, McEwan will expand its presence in a lucrative market in northern Nevada, which Barrick's CEO Mark Bristow recently characterized as "far from a mature district."

The transaction is expected to close in the third quarter of 2024, pending approval from a majority of Timberline shareholders and other customary closing conditions. Cormark Securities is Timberline's financial advisor, while Davis Graham & Stubbs is its legal advisor.

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