Silver Lake cancels merger agreement with Phillips River Mining

11 March 2012 (Last Updated March 11th, 2012 18:30)

Western Australia's Silver Lake Resources has cancelled a merger implementation agreement with Phillips River Mining.

Western Australia's Silver Lake Resources has cancelled a merger implementation agreement with Phillips River Mining.

The company said that it terminated the merger because enquiries undertaken in relation to Phillips River have not been satisfied.

Directors of Silver Lake said that they were disappointed that this action was necessary but the due diligence process identified a potential issue with the concentrate delivery schedule within the metals offtake agreement for the Trilogy Project between LN Metals International Limited and Phillips River.

Silver Lake offered an A$20m ($21m) merger agreement with fellow-listed Phillips River in January to combine the two companies assets.

Under the deal, Phillips River shareholders would have received 0.0882 Silver Lake shares for each Phillips River share held.

Silver Lake would also have made available a A$1.3m ($1.36m) secured convertible note facility to Phillips River to provide the company with sufficient working capital to continue activity on its tenement portfolio, reports miningweekly.com.

The company has now entered into an asset sale agreement with Phillips River to acquire the Munglinup project for A$325,000 ($341,997).

Silver Lake plans to develop large production centres at Mount Monger and at the Murchison with multiple mines at each centre.