Venturing out from its stronghold in eastern Canada, Linear Resources (LRR-V) has inked an arm’s length letter of intent to acquire MIM Exploration’s Central American exploration portfolio from London-listed Xstrata.
Under the agreement, Linear would acquire Panamanian-based Minera Mount Isa Panama, which is actively exploring for gold and base metals in the Dominican Republic and Panama. The Halifax-based junior would also pick up a 100% interest in M.I.M. Mexico a gold and base metal explorer in that country.
The package also includes all of Xstrata’s mineral exploration concessions in the Dominican Republic and Mexico, plus the company’s extensive exploration database covering the entire Central American region.
In return, Linear would issue Xstrata 1 million shares, at a deemed price of 76 per share, plus 2-year warrants good for up to 500,000 additional shares at $1 per share. The cash portion of the deal was not disclosed.
Linear will also pay a finder’s fee, in cash and/or shares, to Mexican consulting company Minera Cascabel. The fee falls from 10% on the first $300,000 of the deal’s value, to 7.5% on the subsequent $700,000, to 5% on anything exceeding $1 million. The consulting firm will also receive a payment equal to 5% of what Linear spends during the first year of exploration on the properties.
When the dust settles, Xstrata would become an insider of Linear by holding more than 10% of the company’s issued shares. There will be no change in the company’s management.
The agreement is subject to due diligence and regulatory approval.
Xstrata recently acquired Aussie miner M.I.M. Holdings, Australia’s fifth-largest exporter of coal, in a cash-and-debt takeover deal valued at A$4.9-billion. The acquisition moved Xstrata to fourth spot among the world’s largest diversified miners.
Xstrata is 40%-owned by Swiss commodity trader Glencore International.
Linear shares were off a dime at 85 in early afternoon trade in Vancouver following the news on Aug. 26.
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