Blame abounds in collapse of Geomaque/Milagro merger

The proposed merger of Geomaque Explorations (GEO-T) and Milagro Minerals (MLG-V) has been killed, but who pulled the trigger is being hotly debated by the companies.

Geomaque balked at merging until “certain outstanding legal issues” regarding the title to Milagro’s principal asset, a 10,000-ha polymetallic concession in Honduras, were resolved. That property hosts numerous gold and base metal targets, including the Vueltas del Rio gold deposit, which has a drill-indicated resource of 300,000 oz. gold.

While both parties agree that Geomaque is the unwilling signatory, they offer different views on the consequences of Geomaque’s hesitance.

“We haven’t pulled our offer out,” says John Paterson, Geomaque’s president.

As Paterson explains it, Milagro was simply not willing to wait for Geomaque’s lawyers to clarify the legal status of the Honduran concession.

Consequently, Milagro began negotiating with other companies.

Under the terms of the proposed merger, Milagro would have recieved one Geomaque share for every four Milagro shares held.

According to shareholder and former president James Brady, Geomaque defaulted on the agreement by failing to close it by the prescribed deadline.

“We didn’t withdraw, they defaulted on the closing, that’s all,” he says. “We gave them a number of alternatives, and they just didn’t do anything.” Geomaque, according to Brady, wanted to add to the merger agreement a condition requiring Milagro to hold exploitation permits for the Honduran concession before a deal could be finalized.

The receipt of permits is imminent, said Brady, adding that Milagro would not have complied with such a condition. “With those permits in our hands,” he explained, “this company [would be] worth considerably more than it is now.” Paterson denies, however, that such a provision was ever discussed. “We didn’t add any conditions whatsoever,” he said.

Geomaque will be compensated for its $300,000 advance with Milagro shares.

Since each blames the other for the collapse of the deal, the form of that compensation is also being disputed. Milago claims Geomaque is only entitled to 200,000 shares at $1.50 each, whereas Geomaque says it is entitled to 600,000 shares at 50 cents each.