S2 to Finnish subsidiary handover to Outback Goldfields

S2 Resources (ASX:S2R) has signed a letter of intent (LoI) to offload its wholly owned Finnish subsidiary, Sakumpu Exploration Oy, to Victorian gold explorer Outback Goldfields (CVE:OZ) for C$7 million in cash and shares.  

Sakumpu Exploration holds all of S2’s ‘highly prospective’ portfolio of gold projects in Finland, which comprise over 35,000 hectares in the prospective Central Lapland Greenstone Belt of northern Finland via a mix of granted exploration licences, applications, and reservations. 

Key projects include the Paana, Rova, Putaanperä, Ruopas, and Pahavuoma projects.     

S2 Resources, which has a $58.87 million market capitalisation, says consideration of the deal will provide it with C$1.5 million in cash to supplement its existing treasury and C$5.5 million worth of shares in Outback. 

Once completed, the deal will create a new Canada-listed Finnish explorer, alongside other notable figures such as Rupert Resources (TSE:RUP), Aurion Resources (CVE:AU), and FireFox.

The transaction is subject to the buyer undertaking a concurrent non-brokered private $5 million financing to fund exploration of S2 ground in Finland. Once complete, S2 will emerge with an estimated 35% to 45% shareholding in Outback. 

This shareholding in Outback will provide ‘significant’ continuing exposure to exploration upside of S2’s Finnish ground position.  

On 1 March 2024, Outback Goldfields announced it was satisfied with the results of its due diligence investigation and, as part of the takeover, offered S2 Resources a joint venture earn-in option to earn an interest in its Glenfine, Silver Spoon, Ballarat West, and Yeungroon gold projects in Victoria, Australia. 

Outback’s projects are expected to have exploration synergies with S2’s gold projects near the Fosterville Gold Mine. 

S2 Resources Executive Chairman Mark Bennett says: “We are very pleased to partner with Outback to create a new Canadian-listed company focused on exploring S2’s portfolio of highly prospective gold projects in Finland. 

S2 has had significant early stage exploration success at these projects in a short period of time. This transaction will further solidify S2 as a leading explorer in the Greater Fosterville area, allowing Outback to solely focus on advancing exploration in Finland.”

Outback Goldfields CEO Chris Donaldson says: “This is a transformative acquisition for Outback, providing our company with a world-class portfolio of projects in a highly prospective jurisdiction. 

The Central Lapland Greenstone Belt of Northern Finland is an emerging gold camp and is host to several recent gold discoveries including Europe’s largest primary gold mine, Agnico Eagle’s Kittilä Mine, which produces over 200,000oz gold per annum. 

We look forward to working with S2 on completing this transaction and focusing our technical team solely on making gold discoveries in Finland.”

The transaction does not trigger the right of first refusal held by Kinross over some of Sakumpu’s tenure. 

S2 Resources is a gold and base metals explorer operating in stable jurisdictions such as Australia and Europe. 

Outback Goldfields is focused on exploring for ‘high-grade’ gold in the historic Victorian Goldfields.  

As of December 2023, S2 Resources had $9 million cash at hand, according to its latest investor presentation.   

Write to Adam Drought at Mining.com.au

Images: S2 Resources
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Written By Adam Drought
Born and raised in the UK, Adam is a sports fanatic with an interest in Rugby League and UFC/MMA. When not training in Muay Thai and Brazilian Jiu Jitsu, Adam attends Griffith University where he is completing his final year of a Communication & Journalism degree.