Toronto-based Minorca Resources (MAR-T) intends to merge with Val d’Or, Que.-based gold miner McWatters Mining (MCW-T).
McWatters will acquire all the outstanding shares of Minorca on the basis of 0.555 of a McWatters share for each Minorca share.
For Minorca shareholders, who will end up with an aggregate 42% stake in McWatters, the deal represents a 61% premium based on the respective closing share prices on Aug. 25. McWatters’ net share increase will be about 7.8 million, bringing its capitalization to just under 50 million shares issued and outstanding.
“McWatters will be the surviving entity at the end of the day,” says Minorca President Joseph del Campo. “We have about $8.8 million in cash, but, after the costs associated with the transaction, McWatters will end up with about $6 million. Plus we have investments in a number of companies, which could be liquidated for several million dollars — that’s the attractiveness of Minorca.”
Minorca has investments in Dayton Mining (DAY-T), Canarc Resource (CCM-T), Tan Range Exploration (TNX-A) and Tri-Star Gold (TSG-V), among others.
McWatters President Claire Derome says Minorca’s cash, which will be added to McWatters’ working capital, will enable the merged company to seek other acquisitions. As for Minorca’s other assets, Derome says there is “no rush for McWatters to hold any fire sales.”
“It’s a good transaction for both companies,” he affirms. “It will allow Minorca shareholders the opportunity to participate in the growth that we’re forecasting for the coming years. For us, it shows that we can achieve growth even in this depressed market. Also, it will broaden our share distribution, allowing our shares to be much more liquid than they are now.”
Shareholders of McWatters and Minorca are expected to meet in mid-October to vote on the proposed merger.
Currently, the only executive to sit on the boards of both Minorca and McWatters is Alfred Lenarciak. Roland Horst resigned from both boards prior to being dismissed by Dayton Mining earlier this summer.
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