VANCOUVER (miningweekly.com) – Junior mining companies Minera Alamos and Corex Gold have announced a merger of the two TSX-V-listed companies on Tuesday.
The merger is expected to create a new entity with a market capitalisation of about C$50-million, with about C$6-million in cash on hand and holding a portfolio of three gold/silver development assets, each offering near-term production potential and low capital cost advantages.
The deal will effectively reunite the Castle Gold development team led by Chester Millar and Darren Koningen, which successfully drove the development of the El Castillo gold mine, which was subsequently acquired by Argonaut Gold for C$130-million.
The arrangement with Corex represents the second major transaction completed by Minera Alamos in the last three months following the announcement of the company's strategic partnership with Osisko Gold Royalties, which owns 15% of Minera Alamos, and its stated goal to build a significant new gold producer in Latin America.
Minera Alamos brings to the table two high-grade, low capital intensity development projects in La Fortuna and Guadalupe de los Reyes, in Mexico, with Corex contributing the Santana project, also in Mexico, where a bulk test programme is under way. Corex's Santana claim area is contiguous with Minera Alamos' Los Verdes mineral claims and there is an immediate opportunity to continue exploration of the Santana gold structures drilled to date, which may extend into the Los Verdes area.
"The Santana project is highly complementary to our existing portfolio and offers tremendous resource upside, coupled with a unique ability to fast-track the company's transformation into a gold producer utilising the existing heap leach infrastructure already in place at site. We are well-positioned to grow quickly into a leading junior gold producer with significant exploration upside," Minera Alamos president and CEO Koningen said in a statement.
The expanded management team has a proven mine development track record and the Minera Alamos board will be further enhanced by the continuing involvement of Millar, who is a Canadian Mining Hall of Fame inductee and former chairperson of Eldorado Gold, Glamis Gold, Alamos Gold and Castle Gold.
The proposed business combination will be completed through a share exchange under a statutory plan of arrangement under the Business Corporations Act of British Columbia, resulting in Corex becoming a wholly owned subsidiary of Minera Alamos. Under the terms of the agreement, each Corex shareholder will be entitled to receive 0.95 common shares of Minera Alamos in exchange for each Corex share held. Upon closing, existing Minera Alamos and Corex shareholders will each own about 50% of the outstanding shares of the combined company.
Minera Alamos has entered into voting and support agreements with each director and senior officer of Corex and certain significant shareholders representing about 26% of the outstanding Corex shares.
The merger is subject to shareholder and court approvals, as well as relevant regulatory approvals, before it is expected to close early in March.