Granges, Hycroft plan merger

A merger proposal has been presented to Hycroft Resources & Development (TSE) by its 50.5% parent, Granges (TSE).

The amalgamation would require the calling of special meetings of the shareholders of Granges and Hycroft to obtain the required approvals. Because the companies share common management, Hycroft’s board has established a special committee of independent directors to review the merger proposal, which offers 0.8 of a common share in the amalgamated company for each common Hycroft share. Granges shareholders would receive one common share of the amalgamated company for each Granges common share. This proposal would result in Hycroft’s public shareholders owning about 23% of the amalgamated company, while Granges shareholders would collectively own about 77%.

Granges management is of the view that the merger would enable shareholders to participate in a larger gold-producing company with the financial capability and human resources to pursue new investment opportunities. The transaction is also expected to contribute to the development of the Brimstone gold deposit at Hycroft’s Crofoot-Lewis gold mine in Nevada. The amalgamation would eliminate the $30-million debt owed to Granges by Hycroft. Both companies have scheduled shareholder’s meetings for late March. Court approval will be required for the amalgamation, which is targeted to take effect March 30.