Metallica Minerals (ASX: MLM) and TSXV-listed Melior Resources (TSXV: MLR) and have agreed to a merger, in what Metallica chairman Peter Turnbull calls a “transformational deal” for both companies.
The companies have inked a binding agreement, which will see Metallica acquire all the issued and outstanding shares in Melior.
Melior shareholders will receive 20 Metallica shares for every one Melior share held.
Once the merger has been finalised, Melior shareholders will own 64% of Metallica. Melior will then be delisted from the TSX Venture Exchange.
The offer is values Metallica at $0.0449, which is a 45% premium to Metallica’s closing price on 11 September of $0.031.
“This is a transformational deal for both companies,” Mr Turnbull said.
“Melior’s Goondicum ilmenite project shares similar attributes to Urquhart Bauxite in that it is fully funded and will be brought into production relatively quickly for a modest capital outlay and will provide a valuable source of near-term cash flow.”
“We look forward to combining the respective skills of the two companies to successfully develop those projects and pursue further growth opportunities to build a significant, profitable, mining house generating excellent returns for shareholders,” Mr Turnbull added.
The final entity will have about $6.6 million in cash and liquid securities, an advanced project with near-term cash flow and a pipeline of development and exploration assets in Queensland.
Goondicum is scheduled to come on line in November this year and produce about 160,000t per annum of ilmenite and 38,000tpa of apatite.
A recent assessment anticipates the project has a net present value (before tax) of US$56 million and a nine-year mine life.
The merged company will also have a 50% stake in the Cape York heavy mineral sands and bauxite project which includes the Urquhart Point heavy mineral sands asset and adjacent Urquhart Point Bauxite deposit.
Metallica will also bring to the table its Cape Flattery silica sand project, and the Esmeralda graphite asset.
Post-merger, the final board make up will include three Metallica directors and three Melior directors.
Commenting on the merger, Melior chief executive officer Mark McCauley said it was a great opportunity for Melior to keep moving forward.
“The value-focused culture and combined technical and commercial skills of the two companies will also greatly enhance the merged group’s capabilities,” Mr McCauley added.