TORONTO (miningweekly.com) – Two Canada-based exploration minnows, Mega Silver and Skybridge Development, have entered a binding letter agreement to merge their businesses through an all-share transaction, the firms announced on Thursday.

According to the agreement, Skybridge shareholders will receive one Mega share for each two and a half Skybridge shares held.

Once the transaction is completed, Mega will issue about 8,30-million shares to Skybridge shareholders, representing approximately 23% of the 35,22-million outstanding Mega common shares following the transaction.

Based on the 20-day volume weighted average of both companies, the offer represents a 30% premium to the shareholders of Skybridge, compared with the company's closing share price on Wednesday.

Skybridge is exploring for copper, molybdenum, gold and rhenium in Nunavut, and Mega Silver, which has a healthy cash balance of about C$11-million, holds interests in properties in the Keno Hill silver camp in the Yukon Territory.

Skybridge also has exploration assets in Red Lake, Ontario.

Shares in both companies, which trade on the TSX Venture Exchange, rose on Thursday after the announcement.

“The combined company will have the cash and expertise to take advantage of the many opportunities that exist in these difficult markets,” commented Skybridge chairperson Ewan Downie.

Skybridge shares will be delisted after the transaction closes.

Shares in Mega Silver leapt 28,2% on Thursday, to C$0,50 apiece by 15:10 in Toronto. Skybridge stock rose 11,1%, to C$0,20 a share.

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