The two companies have signed a non-binding letter of intent for the deal and will now have sixty days to undertake due diligences.

The deal would see shareholders of Golden Horizon receive a share in Golden Spit for each share that they hold. That would result in Golden Spike issuing 11.3 million shares, which would represent about 35.76% of the company.

Golden Spike's share price surged C$0.17 (US$0.13), or 74%, day on day to C$0.40 on June 19.

"Many parts of Newfoundland, including the Gregory River Property still remain relatively underexplored and offer an exciting opportunity for new discoveries," Golden Spike CEO Keith Anderson said.

"In addition, the province offers a favourable regulatory environment and support communities with near year-round operating conditions and excellent nearby infrastructure," he added.

Golden Spike notes that the Gregory River project 100%-owned by Golden Horizon is comprised of 124 claims under 15 mineral licences, covering 3,100 hectares or 7,660 acres.

Historical work on the property has shown it has the potential to host multiple deposit types and styles of mineralization including copper-rich, Cyprus style volcanic massive sulfides, stratigraphic gold-rich exhalative zones, structurally-controlled gold and sulfide-rich quartz lode veining, and low sulphidation epithermal gold style deposits, Golden Spike said.

"The style of mineralization and geological setting identified at the Gregory River Property is highly analogous, and along a north-northwest trend to the York Harbor Metals Inc. copper and zinc-rich VMS mineralization that occurs approximately 37 km to the south, within the southern portion of Bay of Islands Ophiolite Complex of rocks," the company said.

Golden Spike currently holds the rights to acquire 100% interest in the Camping Lake project in the Red Lake Mining District of Ontario.

The company's market capitalization is C$8.12 million.