Soma Gold (TSX-V:SOMA) is eyeing two types of potential acquisitions, amid undergoing several M&A discussions while El Limon is being recommissioned in Colombia.
Speaking to Mining.com.au, CEO Geoff Hampson the first prospective deal is a small strategic “tuck-in” similar to the Escondida Mine deal executed earlier this month.
“The second would be some form of a merger of equals where both companies can gain scale and asset diversity,” Hampson says.
Soma Gold recently signed an agreement to acquire the La Escondida Gold Mine in Antioquia, subject to final legal due diligence. La Escondida, covering 1,051 hectares, is a small-scale operation with a full set of permits. The mine is located within trucking distance to the company’s El Limón Mine.
Soma Gold sometimes uses advisors when pursuing deals, but currently does not have any retained advisors actively looking.
Hampson notes the company welcomes advisory approaches and pitches from firms regarding attractive targets.
The rationale behind the acquisitive strategy, broadly speaking, is that the market rewards and re-rates companies seeking scale.
“If we can get production up over 100,000 ounces per year, the company’s shares appeal to larger funds and investors,” the CEO tells this news service.
According to Hampson, Soma has not experienced any significant difficulties conducting these M&A discussions. However, he concedes that it is the mining industry so there is always something.
“Whether it be equipment break down, poor ground conditions, delays in permits etcetera. But overall there is no real impediment to our strategy or operations.”
Soma Gold owns the El Bagre Mine located on a 41,427 hectare property in Colombia. The company also owns two Merrill Crowe mills on the property, a 450 tonnes per day operating mill and a 275 tonnes per day mill set to restart operations this year.
The two mills can be expanded to 1,400 tonnes per day with all permits currently in place.
Write to Aaliyah Rogan at Mining.com.au
Images: Soma Gold
