Australian mining companies Baru Resources and Argosy Minerals are set to ink a Takeover Bid Implementation Deed to merge their cash and graphite projects in Namibia.

As per the terms of the agreement, Baru Resources will acquire all the stakes of Argosy in an all-share deal through an off-market takeover offer.

With this arrangement, Argosy will become a wholly owned subsidiary of Baru and current Argosy and Baru shareholders will hold 72% and 28% ownership respectively in the new entity.

Commenting on the alliance, Argosy chief executive officer Peter Lloyd said: "Given the current tough market conditions to raise capital, this is an excellent opportunity for Argosy shareholders to progress the Namibian graphite projects given Baru’s cash reserves and management expertise."

The new venture will use $3m cash reserves from Baru to invest in graphite projects .

Baru executive director Kevin Nichol said: "The Argosy graphite project is really exciting, and with the continued expertise of Argosy Directors Danie van den Berg and Phillip Thick, Baru will look to progress this project as soon as possible."