TORONTO (miningweekly.com) – Toronto-listed project developer Transition Metals and private Sudbury, Ontario-based firm HTX Minerals on Monday announced they have entered into a letter of intent to combine the businesses.
Under the agreement, inked on Sunday, the two companies intend to implement an all-script plan of arrangement, by which Transition would acquire all of HTX’s securities.
"This is very positive for the shareholders, employees and partners of both companies. The combined entity would be a much larger project generator focused on discovering gold, platinum and base-metals deposits in Canada," Transition Metals and HTX Minerals CEO Scott McLean said on Monday.
With an award-winning and highly experienced team of geologists, strategic exploration alliances with Implats and the Nunavut Resources Corporation (NRC), joint venture (JV) partnerships, and a portfolio of 20 projects in Ontario, Nunavut, Saskatchewan and British Columbia, the company will be further positioned for growth and success,” McLean told Mining Weekly Online at the Prospectors & Developers Association of Canada mining investment convention.
McLean, an award-winning exploration geologist with more than 25 years of experience in all facets of exploration, pointed out the business combination made sense, owing to Transition and HTX sharing similar common shareholder and management structures.
Transition Metals was spun out of HTX Minerals in 2010 to capitalise on the market for gold-focused resource companies, and went public in August 2011 to provide HTX shareholders with some liquidity. While the two companies operate independently, they each follow the project generator business model, and have common CEOs, CFOs and marketing executives.
“By combining the companies’ forces, we expect to end up with a much stronger group, with more projects under its control. "In addition, the two company's projects are very complementary," McLean said.
The business combination also provides the resultant group with a more experienced exploration and management team, which include eight geologists, of which three are prize winners for their critical contributions in discovering new deposits.
McLean emphasised that the project generator business model increases shareholder exposure to discovery, while reducing shareholder equity dilution by relying on partners to fund more expensive drilling and exploration. The combined management team would also have extensive JV negotiation, financial and marketing expertise and has previous operational experience at both small and large companies.
The new firm already has strong regional and strategic alliances, including with Impala Platinum, the world's second-largest producer of platinum, to explore the Mid Continent Rift region, in Ontario, for platinum-group element deposits; and with the NRC for mineral project generation and exploration, including precious, base and strategic metals, and diamonds in the Kitikmeot region, in Nunavut.
The new company’s main focus would, however, be on advancing projects owned by Transition, which include the Haultain gold project, in the southern Abitibi region, as well as a pipeline of six gold projects within the Abitibi area, each with gold mineralisation at surface and the sedimentary-hosted copper project at Janice Lake, in northern Saskatchewan.
HTX brings to the table the Itchen Lake gold property, located 365 km north-east of Yellowknife, in Nunavut (owned by HTX), and Aer-Kidd, a 260 ha nickel/copper/platinum-group metals property 25 km south-west of Sudbury, Ontario.
McLean said the company planned to spend about $4.3-million on exploration this year.
The transaction, which was expected to close in the second quarter, would be considered a reverse take-over for the purposes of the TSX Venture Exchange (TSX-V) and the resulting issuer would be a Tier 2 mining issuer on the TSX-V.
The unaudited combined cash position for Transition and HTX was $2.2-million, as at March 1.
The shares of Transition, which has a market capitalisation of C$1.55-million, traded at 7 Canadian cents apiece on Monday.