Ontex Resources and Roxmark Mines approve merger

Shareholders of junior gold explorers Ontex Resources (ONT-T) and Roxmark Mines (RMK-V) have voted in favour of a merger of the two companies that will build a critical mass of exploration properties in the Geraldton-Beardmore area of northern Ontario.

Ontex shareholders also approved a one-for-three share consolidation, the election of additional directors and the change of Ontex’s name to Goldstone Resources.

The possibility of a merger was first made public on Oct. 13. Under the agreement, Ontex will acquire all of the shares of Roxmark at an agreed upon exchange ratio of one Ontex share for each 1.25 Roxmark shares, based on the companies’ issued and outstanding shares at the time of the offer.

The transaction would be equivalent to 0.80 of an Ontex share for each Roxmark share and represented a 39% premium to Roxmark shareholders based on the 30-day volume-weighted average share price of Ontex’s and Roxmark’s shares as of Oct. 9.

Following the merger, Roxmark shareholders will hold roughly 54% of the combined company, which will have about 92.7 million shares outstanding on a post consolidation basis.

Ontex is advancing its Brookbank project about 175 km northeast of Thunder Bay, a 35-km-long property with past-producing gold mines along strike of it both to the east and west. Brookbank is surrounded by property owned by Kodiak Exploration (KXL-V) and close to properties owned by Premier Gold Mines (PG-T) and Roxmark.

Drilling at Ontex’s Brookbank gold property has delineated a structure over a 7-km strike length with mineralized zones extending from surface to a depth of at least 800 metres.

At a 3.4 gram gold per tonne cut-off grade, indicated resources at Brookbank stand at 1.36 million tonnes grading 9.7 grams gold (for contained gold of 424,400 ounces) and 1.09 million tonnes grading 7.9 grams gold (for 276,600 oz. contained gold) in the inferred category.

Roxmark is pursuing a number of projects in the Beardmore camp, including re-opening the Northern Empire mine and its onsite mill and expanding the resource base at the Leitch-Sand River mine, once Canada’s richest producing gold mine. In addition it is involved in a joint-venture with Premier Gold Mines at the Hardrock project. Roxmark holds a 30% carried interest and Premier is earning a 70% interest.

Drill results from the NN (open-pit target) zone at Hardrock released on Dec. 9 included highlights such as 4.93 grams gold per tonne across 10.5 metres in hole MM071, including 10.03 grams gold across 3.5 metres and 5.69 grams gold across 24.2 metres in hole MM072, including 7.05 grams gold across 18.1 metres. Hole MM074 returned 6.91 grams gold across 18.7 metres, including 11.55 grams gold across 9.7 metres, while hole MM076 cut 3.38 grams gold across 20.9 metres, including 12.99 grams gold across 3.5 metres.

In recent years, Roxmark has generated cash flow from bulk-sampled gold and molybdenum processed at its fully-permitted mill and has the advantage of infrastructure from nine formerly highly productive gold mines located on its properties.

These mines previously produced nearly four million ounces of gold from high-grade ore but were closed primarily due to boundary issues and dramatically lower gold prices at the time.

The new company will be led by Ontex’s management team, augmented by Roxmark management including Monir Younan, the company’s current president who is expected to be appointed as Presiden upon completion of the transaction. The board of directors will be comprised of seven members, including one new director and three directors each from the current Ontex and Roxmark boards.

At presstime Ontex was trading at 26¢ per share and Roxmark was trading at 20¢ per share.

Over the last year Ontex has traded in a range of 14¢-43.5¢ per share and Roxmark between 5.5¢ and 30¢.

Ontex has 128.1 million shares outstanding and Roxmark has 170.3 million shares outstanding.