Shanta Gold reaches agreement to acquire Helio Resource Corp.

Shanta Gold and Helio Resource Corporation announced on Tuesday that they had entered into a definitive arm's-length arrangement agreement dated as of 19 June Vancouver time, under which - subject to Helio shareholder approval and British Columbia Supreme Court approval - Shanta will acquire all of the issued and outstanding common shares of the TSX-listed Helio by way of a statutory plan of arrangement.

The board of the AIM-traded Shanta, as well as Helio’s directors, recommended the conditional acquisition of 100% of all outstanding Helio shares in exchange for 59.5 million Shanta shares.

Shanta would acquire Helio's SMP project, which lay immediately adjacent to Shanta's operating New Luika Gold Mine.

Helio's resource consisted of an NI 43-101 compliant gold resource consisting of 635k gold oz at an average grade of 2.4g/t.

All of those resources were located within 20km of Shanta's existing NLGM processing plant.

The JORC compliant resources included an open pit indicated gold resource of 332koz at 1.8g/t and inferred resource of 17koz at 1.6g/t, and an underground indicated gold resource of 258koz at 4.9g/t and inferred resource of 27koz at 3.8g/t.

Shanta said the acquisition would result in an increase in its gold resource ounces of 77% from 824koz at 1.9g/t to 1,459koz at 2.09g/t.

Those ounces were not yet incorporated into NLGM's mine plan.

The resources are exclusive of NLGM's current proven and probable JORC compliant mine reserves of 515,000 ounces at an average grade of 4.4g/t as announced on 23 March.

Shanta said it intended to incorporate those resources into its future mine plan and explore the potential to expand the NLGM production rate incorporating the additional resources as soon as possible.

Voting support agreements had been entered into by 39.25% of Helio's shareholders, which included 4.95% held by Helio's board of directors and management.

Shanta was preparing NI 43-101 technical reports on its assets for the benefit of Helio shareholders.

“The inclusion of the Helio resources into Shanta's portfolio strengthens the opportunity to deliver an expansion option for the New Luika Gold Mine and to also potentially extend mine life,” said Shanta CEO Toby Bradbury.

“This comes after our recent announcement of the Nkuluwisi resource of 4 million tonnes for 141k oz at 1.1g/t.

“New Luika is well established with long term water security and low cost and long life power servicing an established and efficient processing plant,” Dr Bradbury added.

Richard Williams, chief executive officer of Helio, said that after many years of exploration efforts and a number of economic assessment studies it was “clear” that the best outcome for Helio shareholders was to combine with Shanta for the development of its gold resources on its SMP property in Tanzania.

“This all-share transaction represents a unique opportunity for Helio shareholders to participate in the future growth and value creation of the New Luika Gold Mine.

“We look forward to working with Shanta's board and management to complete this transaction in a timely fashion.”