Linear sets sights on Xstrata properties

Venturing from its stronghold in eastern Canada, Linear Resources (LRR-V) has inked a letter of intent to acquire various properties in Latin America from London-listed Xstrata.

The properties are in the Dominican Republic, Panama and Mexico.

In return, Linear will issue Xstrata 1 million shares at a deemed price of 76 per share, as well as 2-year warrants, which are good for up to 500,000 additional shares at $1 per share. The cash portion of the deal was not disclosed.

Linear will also pay a finder’s fee to Mexican consulting company Minera Cascabel. The fee slides from 10% on the first $300,000 of the deal’s value to 7.5% on the subsequent $700,000; it falls to 5% on anything exceeding $1 million. The consulting firm will also receive a payment equal to 5% of what Linear spends exploring the properties during the first year of ownership.

When the dust settles, Xstrata would become an insider of Linear by holding more than 10% of the company’s issued shares. There will be no change in the company’s management.

Xstrata recently acquired Aussie miner M.I.M. Holdings, Australia’s fifth-largest exporter of coal, in a cash-and-debt takeover deal valued at A$4.9-billion. The acquisition moved Xstrata to fourth spot among the world’s largest diversified miners, behind BHP Billiton Anglo American and Rio Tinto.

Xstrata is 40%-owned by Swiss commodity trader Glencore International.