Canadian Gold Hunter And Suramina Merge

VANCOUVER — Two Lundin Group companies, Canadian Gold Hunter (CGH-T) and Suramina Resources, have officially combined forces now that shareholders have approved a merger.

There was virtually no opposition by voting shareholders to the merger that sees Gold Hunter issuing 0.7541 of its shares for every Suramina share.

Suramina has become a subsidiary of Gold Hunter, with Suramina’s shareholders controlling 47.3% of the combined company’s 110.3 million shares outstanding.

On news of the merger, Suramina’s share price dropped half a cent to 26.5¢ and Gold Hunter’s shares fell 2.5¢ to 30.5¢.

In justifying the merger, the companies stated that in the short term, capital markets will prefer “stronger, larger, diversified exploration vehicles;” that a combined company would provide savings at its head office; and that together, the companies would have a more diversified portfolio of projects at varying stages of development.

The merger will bring Suramina’s South American properties and Gold Hunter’s North American assets under one roof. Suramina’s most advanced project is the Josemaria copper-gold project in San Juan province, Argentina, where it has calculated an inferred resource of 460 million tonnes grading 0.39% copper and 0.3 gram gold per tonne.

Suramina recently announced it and Japan Oil Gas and Metals National Corp. (JOGMEC) had signed a letter of intent that allows JOGMEC to acquire a 40% interest in Josemaria so long as it spends $7 million on exploration over three years.

The joint venture follows another Suramina entered into with JOGMEC. Known as the Vicuna joint venture, the first agreement encompasses three copper-gold properties: Los Helados in Chile, Cerro Blanco in both Argentina and Chile, and Filo del Sol in Argentina. JOGMEC has so far earned a 40% interest in the JV.

As for Gold Hunter, its most advanced project is the GJ-Kinaskan project, about 200 km north of Stewart, B. C., where it has calculated a measured and indicated resource of 153.3 million tonnes grading 0.321% copper and 0.369 gram gold. Gold Hunter owns 100% of the project.

At the Zymo property, 40 km west of Smithers, B. C., Gold Hunter can initially earn a 60% interest from Eastfield Resources (ETF-V, ETFLF-O) for $350,000 in cash, 50,000 shares and $4 million in exploration spending over five years. In 2008, Gold Hunter drilled as much as 75 metres in hole 9 grading 0.72% copper and 0.54 gram gold starting 15 metres down-hole.

In Mexico, about 70 km north of Veracruz, Gold Hunter can earn a 70% interest in the Caballo Blanco gold project from Almaden Minerals (AMM-T, AAU-X) so long as it spends US$12 million on exploration over six years. In 2006, a previous operator drilled as much as 230 metres grading 0.8 gram gold starting from surface.

As for plans in 2009, it is unclear how the merger will affect either company’s previously stated plans. Suramina said in its 2008 annual report it intended to complete drill programs at Los Helados and Cerro Blanco and restart exploration at Josemaria in the third quarter.

Gold Hunter has said it plans on drilling at Zymo, thereby fulfilling obligations under its option agreement, but that it did not foresee conducting an exploration program at GJ-Kinaskan in 2009. Gold Hunter cited a desire to preserve cash for inactivity on the ground at GJ-Kinaskan.

As for working capital, as of Dec. 31, Suramina had $4 million and Gold Hunter, $6.7 million.