Harmony to benefit from merger

To simplify management of the Harmony Gold project in the Queen Charlotte Islands of British Columbia, the two joint owners plan to merge.

Misty Mountain Gold (TSE) will issue 4.25 shares for each share of Romulus Resources (VSE) and, upon completion of the merger, will consolidate on a 1-for-10 basis. The consolidated company will have 9.2 million shares outstanding on a fully diluted basis, with former shareholders of Romulus and Misty Mountain each holding 4.6 million shares on a fully diluted basis.

The new company will have $2.3 million in working capital ($7 million on a fully diluted basis) and retain $58 million in tax pools, which can be used to offset future income.

The companies expect to complete the merger and rollback by early October.

Previous work on the Harmony Gold project, formerly known as Cinola, outlined an open-pit, minable reserve of 34.5 million tons grading 0.064 oz. gold per ton at a stripping ratio of 1.7-to-1.

Former operators of the Cinola met with stiff opposition to their proposal to operate a large-scale, open-pit mine, and subsequently abandoned the project.

Romulus is taking a different approach by outlining higher-grade zones within the deposit.

Previous drill results indicate the presence of bonanza gold veins which could be developed using small-scale, low-impact mining methods.

The joint venture has received the necessary permits for drilling, which will likely get under way before the end of August.

Scott Cousens, a spokesman for Romulus, says a fixed budget has not been set for work on the Harmony. He adds, “we are not constrained by weather on the property and can essentially work year-round.” As a result, work is expected to continue as long as results warrant.