Orezone, Coronation reveal merger details

Orezone Resources (ORZ-T) and London-listed Coronation International Mining have released the details of their previously proposed merger.

Under the deal, Orezone would issue 21.5 million class A shares in exchange for all of the nearly 30.9 million issued and outstanding shares of Coronation. Orezone would also issue another 12.6 million class A shares, plus a note in the amount of $572,095, which is convertible into about 2.1 million class A Orezone shares. The note settles certain of Coronation’s debts.

Also under the deal, about 3.7 million outstanding Coronation share purchase warrants will be converted into more than 2.6 million Orezone purchase warrants.

Orezone has also agreed to guarantee up to $1.5 million in liabilities owed by Coronation to Great Western Mining Company Limited, Coronation’s principal shareholder. The liability bears no interest for three years and will remain guaranteed as long as Orezone holds the Essakan gold project in Burkina Faso, West Africa.

In conjunction with the closing of the merger, Orezone also expects to complete a non-brokered private placement of 12.5 million class A shares for proceeds of $2.5 million.

When all is said and done, the new Orezone will have more than 70.9 million class A shares issued and outstanding; nearly 79.6 million on a fully diluted basis.

The deal is subject to regulatory approval, due diligence and the approval of both companies’ shareholders.

Most of Orezone’s shareholders have already given the deal the nod. The plan will face a vote by Coronation shareholders during the last week of June. Great Western is backing the deal.

Orezone owns four properties in Burkina Faso, as well as the Kantela property, near the Sadiola mine in western Mali, where drilling has intersected a gold-mineralized breccia zone near the surface.

Coronation’s portfolio includes the Essakan gold property in Burkina Faso and the Pagala base metal property in Togo. At the former, BHP Billiton (BHP-N) outlined a resource of 20 million tonnes grading 2 grams gold per tonne; the latter is being explored by Anglo American (AAUK-Q), which can earn a 60% interest by delivering a prefeasibility study.