Commerce and Mont Royal sign definitive merger deal

Commerce Resources Corp. [CCE-TSXV, OTCQX-CMRZF, D7HO-FSE] and Mont Royal Resources [MRZ-ASX] have entered into a merger arrangement that is expected to create a Canadian-focused critical minerals development company.

Under a definitive agreement, Mont Royal has pledged to acquire 100% of the issued and outstanding shares of Commerce by way of a court-approved plan of arrangement. The transaction will create a Quebec-focused critical minerals explorer and developer via a combination of Commerce’s Ashram rare earths and fluorspar project, and Eldor niobium project, and Mont Royal’s Northern Lights lithium project.

The merger will result in a dual listing on the TSX Venture Exchange and Australian Securities Exchange, allowing for greater access to liquidity and financing for the Ashram project. The combined entity is expected to bring together highly experienced members of the management teams of each company with strong capital markets experience, project development and operational experience.

Under the terms of the agreement, holders of Commerce shares will receive 2.3271 ordinary shares of Mont Royal in exchange for each Commerce share held immediately prior to the effective time of the transaction.

Based on the exchange ratio and 30-traded day volume weighted average price of 4.391 Australian cents per Mont Royal share on the ASX prior to the suspension on February 14, 2025, this represents an implied value of 9.3 cents per Commerce share, or an equity value of $17.2 million and an implied premium of 55% to Commerce’s closing price of $0.06 on April 8, 2025.

The transaction is conditional upon, among other things, Mont Royal raising up to $10 million (Australian) through the issue of Mont Royal shares, pursuant to an equity offering in Australia. Net proceeds of the equity raise are expected to be used for, among other things, advancing the preliminary economic assessment (PEA) at the Ashram project, while also advancing the Eldor niobium project and the exploration pipeline at the Northern Lights project.

In addition to the announcement of the transaction, Commerce intends to conduct a convertible note financing with a number of existing Comerce and Mont Royal shareholders, and other sophisticated investors, to raise up to $2.2 million to provide interim financing to be used for the continuation of studies for development of the Ashram project and for working capital while the transaction is being completed.

Commerce shares were unchanged at $0.07. The shares trade in a 52-week range of 16.5 cents and $0.06.

Commerce’s Ashram Rare deposit ranks as one of the largest REE (and Fluorspar) deposits globally, consisting of a monazite dominated, single mineralized body outcropping at surface.

The Ashram deposit has a fluorspar component which makes it one of the largest potential sources of fluorspar in the world and a potential long-term supplier to the met-spar and acid-spar markets. The value of the project could be enhanced by confirmation of a significant niobium discovery, including 24 metres of 0.91% Nb205, adjacent to the Ashram deposit.