An agreement in principle was reached between El Condor Resources (VSE) and Covenant Resources (VSE) for the merger of the two companies. The new company will issue one new share for each El Condor and Covenant share.
Covenant, essentially a shell company, has about three million shares outstanding fully diluted, and about $1.2 million in working capital. El Condor has about 5.7 million shares fully diluted, giving the merged company a total of just under nine million shares outstanding. Both issues recently traded at the $2 level.
Stephen Millen, a director with El Condor, said the merger would help the company develop the South Kemess property in north-central British Columbia.
Drilling by the company last year identified a large porphyry copper-gold deposit at the property.
El Condor, in a 60-40 joint venture with Kennecott, is earning a 60% interest in the South Kemess property from St. Philips Resources (VSE) and Stork Ventures. Stork, 25% owner of the property before the earn-in, is now wholly owned by St. Philips although El Condor is disputing St. Philips’ purchase of the company.
Millen said the merger with Covenant will add the financial and promotional expertise of Covenant principals, Robert Hunter and Robert Dickinson.
Hunter and Dickinson were instrumental in the development and eventual sale to Placer Dome of the Mount Milligan copper-gold deposit, about 300 km to the southeast of the South Kemess property.
Subject to regulatory and shareholder approvals, the merger is expected to be completed by mid-July.
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