TSX-V-listed mining juniors Atico Mining and Toachi Mining on Monday announced a transaction to create a new Latin America-focused copper/gold company, anchored by the producing El Robe mine in Colombia and the high-grade La Plata project, in Ecuador.
In terms of the transaction, Atico will acquire all the Toachi issued and outstanding common shares on the basis of 0.24897 Atico common shares for each Toachi common share, implying a consideration of about C$0.073 a common share.
This represents a 47% premium to Toachi’s closing price on July 5, and a 49% premium to the 20-day volume-weighted average price. Toachi's stock jumped 30% on Monday to C$0.065 a share.
"Atico has been successful in transforming the El Roble project into an important cash generating asset with high safety, environmental and operating standards. The results of this success have significantly strengthened our balance sheet and positioned the company for additional value-creating opportunities that can complement the El Roble mine,” said Atico CEO and director Fernando Ganoza.
He continued that the high-grade gold and copper La Plata project provided a value-creating opportunity, noting that the project had a net present value, at a 5% discount rate, of $100-million before tax, with an internal rate of return of 38%.
Upon completion of the transaction, existing Atico and Toachi shareholders will own about 83% and 17% of the pro forma company, respectively.
The board, management and certain shareholders of Toachi support the planned combination of the two companies.
The proposed transaction will be completed pursuant to a plan of arrangement and will require approval by 66.67% of the votes cast by the shareholders of Toachi at a special meeting in September.