Bonterra Resources has signed an agreement to acquire rival Canadian gold mining company Metanor Resources for C$78m ($58.93m) in an all-stock deal.
The merger is expected to create a new Canadian gold mining company focused on having a major position in the Urban Barry Quebec Gold Camp in Quebec.
It will create a precious metals growth exploration, development and production firm engaged in one of the top mining jurisdictions in the world, claimed Bonterra.
Under the terms of the deal, Bonterra will buy all the shares of Metanor for C$0.73 ($0.55) in equity consideration with the exchange ratio being 1.6039 Bonterra shares for each Metanor share.
After closing of the merger, the existing Bonterra and Metanor shareholders will hold nearly 58% and 42% stakes, respectively in the enlarged Canadian gold mining company.
The transaction will enable the combined company to gain 100% control of the only permitted gold mill in the Urban Barry Camp. According to Bonterra, the gold mill has an expandable centralized production facility and is surrounded by more than 15 known gold deposits within a 100km radius.
The merger will also give the enlarged Canadian gold mining company control of three advanced high grade gold deposits – Gladiator, Bachelor, Barry alongside significant regional priority targets with resource upside potential.
For Bonterra, the merger will help in giving a clear and cost-effective pathway to take its Gladiator deposit into production. Earlier this month, Bonterra reported positive drilling results from the Gladiator gold project by intersecting 30.5 g/t Au over 2.0m.
The merger will also help Bonterra add the Bachelor Mine and the Barry Deposit and associated exploration potential to its current resource portfolio.
On the other hand, Metanor is expected to possess an improved financial strength and flexibility following the merger to boost production and exploration programs in addition to leveraging and improving existing infrastructures.
Metanor is also expected to gain exposure to potential long-life asset to supplement existing production, after the completion of the merger.
Before its merger with Metanor, Bonterra will spin out its Larder Lake assets and liabilities in Ontario along with C$7m ($5.32m) in cash to create a new exploration company called Spinco.