Russian mineral resource firm Intergeo has agreed to acquire Canada-based miner Mercator Minerals, to create a new copper-focused base metals company.
As per the deal, Daselina Investments, Intergeo’s controlling shareholder, will invest $100m in the company at about $0.12 per share.
Prior to closing the deal, Daselina has agreed to advance up to $14m of the investment via a bridge loan to provide Mercator with enough financing to stabilise its operations until the transaction is completed.
Upon completion of the transaction, the new company will be renamed Intergeo Mining.
Intergeo shareholders will own about 85% and the remaining 15% interest will be held by Mercator.
The transaction will also give Intergeo access to Mercator’s Mineral Park mine in Arizona, US, as well as two projects in Mexico that include El Pilar and El Creston.
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Mineral Park mine will receive a substantial cash injection to improve its operations and will become cash flow positive from the new $100m investment as well as service its outstanding debt at current commodity prices.
Intergeo CEO John Lill said the company believes that there are opportunities to create value based on a well-funded business plan for Mineral Park and the combined portfolio of development properties in El Pilar and Ak-Sug.
"We intend to focus our efforts initially on optimising Mineral Park, bringing El Pilar to production and then developing Ak-Sug in a financially disciplined manner," Lill added.
Intergeo has invested more than $200m in its portfolio of properties since 2007 and its key open pit development project is the Ak-Sug copper porphyry deposit located in southern Siberia.