New Kelore, Pan Orvana set to merge

Shareholders of New Kelore Mines (TSE) and private Vancouver company Pan Orvana Resources were recently told to expect a “more vibrant future” after voting almost unanimously in favor of a merger proposal.

Assuming the transaction closes later this month and about 13.5 million shares begin trading in Toronto, the newly created Orvana Minerals is expected to seek out financing for properties in Canada, the U.S. and Chile. At a meeting in Toronto, New Kelore shareholders agreed to exchange their shares on the basis of 3.67 shares of New Kelore for one share of the new company. Pan Orvana shareholders will receive one share of Orvana Minerals for each share held.

Upon completion, resource giant Rio Algom (TSE) will be Orvana’s biggest shareholder with 4.6 million shares or 33%, while about 10% are controlled by a management group led by President Neil Hillhouse.

Kerr Addison Mines (TSE) affiliate RFC Finance (TSE), which now owns 24% of New Kelore, will end up with 6.5% of the amalgamated company. A former chief geologist at Placer Development before it merged with Dome Mines in 1988, Hillhouse helped direct the acquisition of the Misima and Porgera properties in Papua New Guinea as well as the Big Bell mine in Australia. Robert Watts, a former senior executive at Placer Developments and Pegasus Gold (TSE), has been named chairman and chief executive officer of Orvana.

“The merger creates a wonderful set of avenues for New Kelore shareholders,” said Peter Bojtos, who, as president of New Kelore, has a seat on the Orvana board. He said New Kelore has been on the lookout for opportunities because with only $250,000 in cash and a 25% net profits royalty stake in the defunct Goldpost gold mine at Hislop Twp., Ont., the outlook was limited. On the other hand, Pan Orvana, as a reporting issuer, has been attempting to get listed publicly for some time.

Once the merger is completed, he said New Kelore can participate in a number of exploration properties including the 40,000-square-mile OK Syndicate in British Columbia and Washington where Placer Dome (TSE) is funding exploration for gold and copper.

As Placer Dome and a number of other partners have committed $1.1 million for exploration programs managed by Orvana this year, those projects won’t be affected by the merger, Bojtos told The Northern Miner.