PERTH (miningweekly.com) – Dual-listed PMI Gold and Canada’s Keegan Resources have called off a proposed merger, after it was determined that PMI’s shareholders were unlikely to approve the transaction.

In December, the two parties entered into a definitive agreement to form a new company called Asanko Gold, which was touted to be a significant gold development company focused on West Africa.

The merger was expected to create a company with a total market capitalisation of $700-million, with PMI and Keegan shareholders each holding about half of the combined company.

However, in a letter to shareholders, PMI noted that while the majority of the company’s shareholders were supportive of the merger, several of its major shareholders were “not happy with the deal”.

The major shareholders raised three issues of concern, including share dilution, the value ascribed to Keegan’s assets, and the deal structure, which would have seen PMI taken over and not surviving as a listed concern.

PMI chairperson Peter Buck said that despite discussions with the major shareholders about the issues raised, the company had been unable to reach an agreement on arrangements that would satisfy their concerns.

“As a result, we have announced the termination of the arrangement agreement entered into with Keegan,” he said.

PMI would now focus its efforts on progressing its Obotan project, as expeditiously as possible. This would involve continuing discussions and negotiations with a number of banks for project financing.

In addition, the company would also continue to hold further discussions with Keegan and its shareholders to see if amended merger terms could be agreed on.

“In the meantime, your directors have one simple objective in mind. To make sure that all options for creating value are fully explored so that we can unlock the full potential of PMI in the best interest of all shareholders,” Buck said.

Keegan would, in the meantime, proceed with a shareholders meeting scheduled for Tuesday, to consider a name change to Asanko Gold, reflecting the company’s operations in Ghana.