INTEGRA RESOURCES ANNOUNCES TRANSFORMATIONAL MERGER WITH FLORIDA CANYON GOLD CREATING A LEADING GROWTH FOCUSED GOLD AND SILVER PRODUCER IN THE GREAT BASIN

2024-07-29

TSXV - TSX Venture Exchange · Uranium · Rare Earth Elements · Gold · Canada

Canada NewsWire

VANCOUVER, BC and TORONTO , July 29, 2024 /CNW/ - Integra Resources Corp. (" Integra" or the "Company ") (TSXV: ITR) (NYSE American: ITRG) and Florida Canyon Gold Inc. (" FCGI ") (TSXV: FCGV) (together, the " Companies ") are pleased to announce that they have entered into a definitive arrangement agreement (the " Arrangement Agreement "), dated July 28, 2024 , whereby Integra has agreed to acquire all of the issued and outstanding shares of FCGI pursuant to a court-approved plan of arrangement (the " Transaction "). The Transaction will create a diversified, Great Basin-focused gold (" Au ") and silver (" Ag ") producer with immediate gold production of approximately 70 thousand ounces (" kozs ") of gold equivalent (" AuEq ") (1) per annum from the Florida Canyon Gold Mine (" Florida Canyon "), coupled with a built-in growth pipeline of high-quality development stage assets including the DeLamar Project (" DeLamar ") and the Nevada North Project (" Nevada North ").

Under the terms of the Transaction, FCGI shareholders will receive 0.467 of a common share of Integra (each whole share, an " Integra Share ") for each common share of FCGI (" FCGI Share ") held (the " Exchange Ratio "). Existing shareholders of Integra and FCGI will own approximately 60% and 40%, respectively, of the outstanding Integra Shares on closing of the Transaction (but prior to the completion of the equity financing described below) on a fully-diluted in-the-money basis. The Exchange Ratio implies consideration of C$0.69 per FCGI Share based on the closing market price of the Integra Shares on the TSX Venture Exchange (the " TSXV ") on July 26, 2024 for total consideration of approximately C$95 million .

The merger between FCGI and Integra creates a growth focused gold and silver producer in the Great Basin, providing balanced and transformational benefits to shareholders of both Integra and FCGI. The Transaction is strategically aligned with Integra's long-term vision of becoming a leading US based mid-tier gold-silver producer and generating significant value for all shareholders and stakeholders. Following completion of the Transaction, Integra will hold a diversified and tactically sequenced portfolio of gold-silver production and development assets, all within the top tier mining jurisdiction of the Great Basin. Currently cash flowing Florida Canyon will serve as the foundational production asset, underpinned by two high-quality development projects in DeLamar and Nevada North. The combined portfolio provides a pathway for Integra to materially grow its production profile and become a mid-tier producer capable of delivering over 250kozs AuEq (1) per annum from a top tier mining jurisdiction at a competitive all-in sustaining cost (" AISC ").

Strategic Rationale for Transaction

Immediate Gold Production & Cash Flow : The Transaction will establish Integra as a newly formed junior gold-silver producer, providing investors immediate exposure to the strong metal price environment through Florida Canyon.

Florida Canyon:

Florida Canyon is a proven open-pit mining operation located in Nevada , with solid operating performance in recent years due to enhancements to personnel and operational practices. Production in 2023 of ~71kozs AuEq at net cash costs and AISC of US$1,368 /oz and US$1,654 /oz, respectively. (1)(2) The 2024 NI 43-101 Technical Report for Florida Canyon demonstrated a 7 year mine life (not including three years of residual leaching), producing an average of ~70kozs AuEq per annum, generating an after-tax Net Present Value (" NPV ") 5% of US$128 million (using Base Case gold of US$2,200 /oz for 2024, US$2,150 /oz for 2025/2026 and US$1,900 /oz thereafter). (1)

Robust Pipeline to Support Industry Leading Growth : Complementary portfolio of robust, strategically sequenced, oxide heap leach projects, creating clear a path to growing production and becoming a mid-tier precious metals producer.

DeLamar :

DeLamar is an advanced gold-silver heap leach project located in southwestern Idaho . A Mine Plan of Operations has been submitted and deemed complete by the U.S. Bureau of Land Management in June 2024 . DeLamar is one of the few gold-silver development projects in the Western U.S. that will be actively advanced through the National Environmental Protection Agency (" NEPA ") mine permitting process, demonstrating the significant scarcity value of the project. The 2022 Pre-feasibility Study (" PFS ") for DeLamar demonstrated an 8-year mine life, producing an average of 136kozs AuEq per annum, generating an after-tax NPV5% of US$470M and Internal Rate of Return (" IRR ") of 33% (using US$2,000 /oz Au and US$23 /oz Ag). (2)

The 2022 PFS study mine plan excludes ~500kozs AuEq of Measured & Indicated (" M&I ") resources found in historic stockpiles. The stockpiles sit at surface and were mined by previous operators. The stockpile resource was published by Integra in 2023. Feasibility Study work is ongoing which will incorporate the stockpiles into a mine plan. (2)

Nevada North :

Nevada North is comprised of the Wildcat and Mountain View deposits, located in northwestern Nevada . The Wildcat deposit is located approximately 40 miles from Florida Canyon. The 2023 Preliminary Economic Assessment for Nevada North demonstrated a 13-year mine life, producing an average of 80kozs AuEq per annum, generating an after-tax NPV5% of US$490M and IRR of 37% (using US$2,000 /oz Au and US$23 /oz Ag) (1) . Approximately 80% of the stated mineral resource at Nevada North is within the Indicated category. Drilling is currently underway at the Wildcat Deposit to increase oxide mineralization adjacent to the existing resource while also testing the high-grade breccia target for oxide resource expansion and to gather material for further metallurgical and geotechnical testing.

Significant Resource Endowment: Combined portfolio of three high-quality oxide heap leach gold-silver projects within the Great Basin with peer leading resource inventory with 5.2 million ounces (" Mozs ") Au and 152.5Mozs Ag in the M&I category, and 2.9Mozs Au 17.2Mozs Ag in the Inferred category. Total mineral reserves of 2.0Mozs Au and 51.3Mozs Ag in the Proven and Probable category based on oxide and mixed ore. ([1]),([2]),([3]) Strong Potential for Regional Synergies: Tangible synergies exist between Florida Canyon and Nevada North, located approximately 40 miles apart, which are expected to drive significant additional long-term value within the Great Basin for all shareholders and stakeholders. Integra will also benefit from a seasoned and experienced team at Florida Canyon as it brings DeLamar and Nevada North into production. High Quality Team : The executive team and Board of Directors have a proven track record of success in exploration, project-development and mining operations in the U.S. In addition, the senior leadership team boasts significant project financing, mergers & acquisitions (" M&A "), and capital markets experience. Financial Strength : The Company will be strongly positioned to optimize Florida Canyon and advance key milestones at DeLamar and Nevada North – Wheaton Precious Metals Corp. (" Wheaton ") and Beedie Investments Ltd. (" Beedie Capital ") partnerships provide line-of-sight to project financing. Benefits to Local Communities : The Transaction creates 20+ years of employment for the local workforce at Florida Canyon and brings significant benefits to communities surrounding Integra's key projects in Nevada and Idaho . All key projects are located within driving distance of each other.

Jason Kosec , President and Chief Executive Officer of Integra, stated, "The Transaction between Integra and FCGI is a unique opportunity to combine production and cash flows with two complementary high-quality growth projects in the Great Basin, one of the best mining jurisdictions in the world. Post Transaction Integra will benefit from the currently cash flowing Florida Canyon mine, which provides investors immediate exposure to strong metal prices. DeLamar and Nevada North provide an unmatched growth pipeline that create a pathway to grow Integra from a junior to mid-tier producer in the coming years. As DeLamar is advanced through permitting and toward production, it will greatly benefit from the existing operational and technical capabilities of the team operating Florida Canyon. Moreover, the proximity of Florida Canyon to Nevada North will create a 20+ year mining complex that will benefit from tangible synergies and also deliver significant value to both shareholders and local communities. This Transaction represents a monumental step towards Integra's long-term vision of building an industry leading USA focused mid-tier gold producer."

| | | (1) See NI 43-101 technical report titled: "NI 43-101 Technical Report, Florida Canyon Gold Mine, Pershing County, Nevada, USA", dated July 11, 2024 with an effective date of June 28, 2024 available under FCGI's SEDAR+ profile at www.sedarplus.ca . Gold equivalent using US$1,900/oz Au and US$20.00/oz Ag. 2023 production figures for Florida Canyon reported in Argonaut Gold Inc. Management's Discussion & Analysis for the year ended December 31, 2023. Refer to Table 1 below for mineral reserve and resource estimate. | | (2) See NI 43-101 technical report titled: "Technical Report for the DeLamar and Florida Mountain Gold – Silver project, Owyhee County, Idaho, USA", dated March 22, 2022 with an effective date of January 24, 2022 available under Integra Resources' SEDAR+ profile at www.sedarplus.ca and EDGAR profile at www.sec.gov. Gold equivalent using US$1,700/oz Au and US$21.50/oz Ag. Refer to Table 2 below for mineral reserve and resource estimate. | | (3) See NI 43-101 technical report titled: "NI 43-101 Technical Report, Preliminary Economic Assessment for the Wildcat and Mountain View Projects, Pershing and Washoe Counties, Nevada, USA", dated July 30, 2023, with an effective date of June 28, 2023, available under Integra Resources' SEDAR+ profile at www.sedarplus.ca and EDGAR profile at www.sec.gov . Gold equivalent using US$1,700/oz Au and US$21.50/oz Ag. Refer to Table 1 below for mineral reserve and resource estimate. | | |

Audra Walsh , Interim Chief Executive Officer of FCGI, stated , "We are excited to announce the merger of FCGI with Integra, a strategic move that will significantly enhance the combined company's position as a leading US junior gold producer with a strong growth pipeline. This transaction offers FCGI shareholders substantial ongoing ownership in the new company, providing the opportunity to participate in the anticipated future re-rating as DeLamar progresses toward production. The close proximity of Florida Canyon, DeLamar, and Nevada North has the potential to generate substantial synergies, paving the way for accelerated growth and operational efficiencies."

Benefits to Integra Shareholders

Immediate transition from gold developer to junior gold producer with predictable annual production from a proven heap leach mining operation, providing investors exposure to the strong metal price environment. Potential for new oxide discoveries identified at targets along strike at Florida Canyon, which have the potential to significantly extend mine life. Existing Florida Canyon team will provide benefits to entire portfolio of projects. Operational and technical expertise from Florida Canyon will be invaluable for engineering, construction, and ramp-up at Delamar. The proximity of Florida Canyon and Nevada North is expected to create tangible synergies for people and equipment as Nevada North is brought online. The combined company will benefit from enhanced scale and improved capital markets profile, trading liquidity, and expected reduction to cost of capital which will be crucial for project financing at DeLamar. Creates the potential for future index inclusion and the addition of new significant cornerstone investors to join the likes of Wheaton, Beedie Capital, and GMT Capital Corp. (" GMT ")

Benefits to FCGI Shareholders

FCGI shareholders retain meaningful ownership in one of the largest precious metals companies in the Great Basin by mineral endowment. Provides diversification from a single asset production company to a multi-asset vehicle with production and two high-quality development projects, creating a long-term operating platform and pathway for growth. Florida Canyon workforce will benefit from the addition of nearby development projects with potential for career advancements and longevity. Communities surrounding Florida Canyon will benefit from a larger platform to support expanding mining operations within region. Significantly improves the company's capital markets profile with a NYSE American listing and enhanced coverage from the analyst and investor community. In addition, adds a top-tier roster of institutional and strategic investors to support long-term strategy. Addition of a top tier management team with extensive experience across exploration, development, and production in the U.S. as well as deep expertise in capital markets and M&A.

Transaction Details

Pursuant to the Transaction, FCGI shareholders will receive 0.467 of an Integra Share for each FCGI Share held (the " Consideration "). The Consideration implies C$0.69 per FCGI Share and represents an equity valuation of approximately C$95 million based on the closing price of the Integra Shares on July 26, 2024. Existing shareholders of Integra and FCGI will own approximately 60% and 40% of the combined company, respectively, on a fully-diluted in-the-money basis, before given effect any concurrent financing.

The Transaction will be effected by way of a court-approved plan of arrangement under the Canada Business Corporations Act , requiring the approval of (i) at least 66 ⅔% of the votes cast by the shareholders of FCGI voting in person or represented by proxy, (ii) if applicable, a simple majority of the votes cast by shareholders of FCGI, excluding for this purpose the votes of "related parties" and "interested parties" and other votes required to be excluded under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, all at a special meeting of FCGI's shareholders to consider the Transaction, and (iii) the approval of the Ontario Superior Court of Justice.

Directors and senior officers of FCGI have entered into voting support agreements pursuant to which they have agreed, among other things, to vote their FCGI common shares in favour of the Transaction. Voting support agreements have also been received from certain FCGI shareholders.

On the effective date of the Transaction, the Board of Directors (the " Board ") of Integra will be reconstituted such that six current directors of Integra will remain on the Board, and Integra will appoint two additional directors from nominees provided by FCGI.

In addition to shareholder and court approvals, the Transaction is subject to applicable regulatory approvals, including the approvals of the TSXV and the satisfaction of certain other closing conditions customary in transactions of this nature as well as customary interim period covenants regarding the operation of each of the Companies' respective businesses. The Transaction is subject to the prior completion of the sale of FCGI's Mexican assets, as previously announced, and receipt of approval from the Federal Economic Competition Commission (Comisión Federal de Competencia Económica – COFECE), under the Federal Law of Economic Competition, to such sale. The transaction is also conditional upon binding arrangements being in place for the replacement of collateral supporting the FCGI Surety Bond and release of the Alamos Surety Bond Guarantee. The Arrangement Agreement contains customary provisions including fiduciary-out provisions in favour of FCGI, non-solicitation and right to match superior proposals in favour of Integra, and a US$2 .25 million termination fee payable to Integra under certain circumstances. Subject to the satisfaction of these conditions, Integra and FCGI expect that the Transaction will be completed in the fourth quarter of 2024. Details regarding these and other terms of the Transaction are set out in the Arrangement Agreement, which will be available under the SEDAR+ profiles of Integra and FCGI at www.sedarplus.ca .

Full details of the Transaction will be included in the management information circular of FCGI, expected to be mailed to shareholders in September 2024 . The FCGI shareholder's meeting is expected to occur in October 2024 , with closing of the Transaction expected in November 2024 .

None of the securities to be issued pursuant to the Transaction have been or will be registered under the United States Securities Act of 1933, as amended (the " U.S. Securities Act "), or any securities laws of any state of the United States (as defined in Regulation S under the U.S. Securities Act), and any securities issuable in the Transaction are anticipated to be issued in reliance upon available exemption from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and similar exemptions under applicable securities laws of any state of the United States . This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Board of Directors' Recommendation and Voting Support

The Arrangement Agreement and the Transaction have been unanimously approved by the boards of directors of each of Integra and FCGI, and the board of directors of FCGI has recommended that FCGI shareholders vote in favour of the Transaction. Stifel has provided a fairness opinion to the Board of Directors of Integra, stating that, as of the date of its opinion, and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the consideration to be paid under the Transaction is fair, from a financial point of view, to Integra.

Cormark Securities Inc. has provided a fairness opinion to the Board of Directors of FCGI, stating that, as of the date of its opinion, and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the consideration to be paid under the Transaction is fair, from a financial point of view, to FCGI shareholders. The full text of the fairness opinion, which describe, among other things, the assumptions made, procedures followed, factors considered and limitations and qualifications on the review undertaken, and the terms and conditions of the Transaction, will be included in the management information circular of FCGI.

Following completion of the Transaction, the Integra Shares will continue trading on the TSXV and NYSE American, and the FCGI Shares will be de-listed from the TSXV. Approximately 89 million Integra Shares are currently outstanding on a non-diluted basis and approximately 138 million FCGI Shares are currently outstanding on a non-diluted basis. Upon completion of the Transaction (assuming no additional issuances of Integra Shares or FCGI Shares, other than the issuance of Integra Shares on conversion of the Subscription Receipts), there will be approximately 168 million Integra Shares outstanding on a non-diluted basis and approximately 179 million Integra Shares outstanding on a fully-diluted in-the-money basis.

Beedie Capital Consent to the Transaction & Capital Credit Facility

In connection with the closing of the Transaction, Integra is pleased to announce that it has entered into a fourth supplemental credit agreement (" Fourth Supplemental Credit Agreement ") with Beedie Capital to amend the convertible loan agreement dated July 28, 2022 , as amended by a first supplemental credit agreement dated as of February 26, 2023 , a second supplemental credit agreement dated as of May 4, 2023 and a third supplemental agreement dated as of February 20, 2024 (as amended by the Fourth Supplemental Credit Agreement (the " Credit Agreement "), pursuant to which Beedie Capital agreed to loan up to US$20 million (the " Convertible Facility ")). Beedie Capital agreed to a second advance in the amount of US$5 million subject to satisfying certain conditions under the Fourth Supplemental Credit Agreement, and to further amend the Convertible Facility to accommodate the assets of FCGI and its subsidiaries, each of which, following the closing of the Transaction, will be loan parties and provide guarantees and security for the obligations under the Credit Agreement.