TORONTO (miningweekly.com) – TSX-listed copper-miner Quadra Mining has reached an agreement to acquire fellow Canadian Centenario Copper, the firms announced on Monday.

Quadra will offer Centenario shareholders 0,28 of one of its own shares for every Centenario shares, which represents a premium of about 6,6% on the 20-day weighted average trading price of both companies, and a 13% premium over Centenario's closing price on Friday.

Like most of the mergers and acquisitions making headlines so far this year, the deal brings together a cash-strapped company with a lucrative project, and a firm with deep pockets looking to grow its production profile.

Centenario's main asset is its Franke sulphur-extraction/electrowinning heap-leach project in northern Chile, which has a design capacity of 70-million pounds a year of copper cathode.

However, the company has run into funding problems to complete the project. The firm repurchased a portion of its outstanding 2010 copper hedge contracts in November, but its lenders have not yet agreed to release the funds, which are being held in an escrow account.

One of the requirements for the release of the funds is that the lenders are satisfied regarding the company's ability to continue to meet the terms of the existing credit facility

However, Centenario said on Monday it expects the transaction with Quadra should allow the firm to restructure or refinance its existing loan and resolve the funding shortfall.

Quadra started producing copper cathode at its second mine – the Carlota operation in Arizona – in December, and also operates the Robinson mine, in Nevada, which it bought from BHP Billiton and restarted in 2004.

The enlarged company will produce between 275-million and 300-million pounds a year of copper, said Quadra president and CEO Paul Blythe.

The firms have estimated that it will take about $25-million to bring the Franke project to a point where it is generating positive cashflow.

In the meantime, Quadra has agreed to loan Centenario up to $3,5-million and subscribe for 10,24-million treasury common shares of Centenario, at a subscription price of C$0,80 per share, for a total aggregate investment of approximately US$10 million

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