PERTH (miningweekly.com) – ASX-listed Titan Minerals and TSX-V-listed Core Gold have struck a C$72-million merger agreement to create a diversified Latin America-focused gold company.

Under the merger agreement, each Core shareholder will receive 20 fully paid ordinary shares in Titan, for every one Core share held. The Core option and warrant holders would receive options in Titan on comparable terms.

The implied offer price represented a 44.7% premium to Core’s closing price on the TSX-V on February 22, of C$0.31 a share, and a 53.8% premium to the 20-day volume-weighted average price of Core’s shares on the TSX-V.

In connection with the merger, Titan will also conduct a share placement to eligible institutional and sophisticated investors to raise a minimum of A$20-million, at an issue price to be agreed upon by Titan and Core.

The share issue will be subject to shareholder approval, and completion of the merger is conditional on the completion of the placement.

Post the merger, Core shareholders will hold a 48.5% interest in the combined company, with Titan shareholders holding the remaining 38.9% interest. The new shareholders subscribing for shares under the placement will hold the remaining 12.6% interest in the combined company.

“The combination of Titan and Core Gold has compelling strategic logic and merit, which was unanimously recognised by the board of directors of both companies,” said Titan chairperson Matthew Car.

“The combined organisation will be an emerging Ecuador- and Peru-focused gold company with an outstanding portfolio of gold assets. We are confident that merging the companies will result in significant benefits to both sets of shareholders with a potential re-rating opportunity for the expanded shareholder base from an enhanced capital markets profile.”

The combined group will have a an ASX listing and a measured resource of 437 000 oz, an indicated resource of 585 000 oz and an inferred resource of some 1.1-million ounces at the Dynasty goldfield project in Ecuador, as well as a portfolio of highly prospective exploration projects across Ecuador and Peru.

“The merger with Titan allows Core shareholders to unlock value from Core’s underexplored exploration and development assets. With the additional A$20-million of equity capital to be obtained at closing of the merger, we can now undertake a significant exploration programme at Dynasty Goldfield, drill test the other highly prospective properties, as well as optimise production capacity and recoveries at the Portovelo mill and processing plant, which has been underperforming due to Core’s capital constraints,” said Core lead director Gregg Sedun.

“While still retaining 48.5% of the pro-forma entity, this transaction with Titan provides an attractive and immediate premium to Core shareholders and allows them to participate as meaningful shareholders in a well-funded gold company listed in Australia, where we believe more attractive valuations will be afforded to our asset base.”

Post the merger, the proposed board will consist of three Titan nominees and three Core nominees, with the chairperson of the combined company to be chosen from among the Core director nominees.

Titan nominee Laurence Marsland will assume the role of CEO and MD, while Matthew Carr will assume an executive director role.

In addition to shareholder approval and the A$20-million capital raising, the merger would also be conditional on Titan entering into an additional $10-million financing, either through a credit facility or other borrowing, or the issue of new shares.