Serengeti Resources Inc. [SIR-TSXV] and Sun Metals Corp. [SUNM-TSXV] have agreed to merge in a move to consolidate their copper-gold assets in north-central British Columbia. Concurrent with the transaction, Sun Metals said it is raising $8.0 million from a bought deal private placement of 64 million subscription receipts at $0.125 each.
Sun Metals has granted the underwriters a green shoe option to purchase up to an additional 9.6 million subscription receipts at the issue price, potentially raising an additional $1.2 million in gross proceeds.
Sun Metals shares advanced on the news, rising 14.3% or $0.015 to 12 cents on active volume of 1.16 million. The shares trade in a 52-week range of 24.5 cents and $0.055.
Serengeti eased 9.1% or $0.03 to 30 cents on volume of 325,900. The shares trade in a 52-week range of 38 cents and 14.5 cents.
Under the merger deal, Serengeti will acquire all of the issued and outstanding shares of Sun Metals on the basis of 0.43 common shares of Serengeti on a pre-consolidation basis for each share of Sun Metals held, by way of a plan of arrangement.
Prior to closing, it is expected that Serengeti will consolidate its common shares on a two for one basis. Shareholders of both companies will meet on February, 2021 to approve the proposed merger which is expected to close shortly thereafter.
The transaction will consolidate the contiguous copper-gold exploration and development assets that include Serengeti’s Kwanika Project and Sun Metals’ Stardust Project. Both of these assets are expected to benefit from operational synergies as they are advanced with a combined development strategy.
Upon completion of the transaction, it is expected that shareholders of Sun Metals will hold approximately 40% of Serengeti’s issued and outstanding shares (prior to the concurrent financing).
Sun Metals’ director Mark O’Dea will be Executive Chairman with Serengeti CEO David Moore as interim CEO.
Serengeti is advancing its Kwanika copper-gold project in partnership with POSCO DAEWOOD. However, the company hasn’t had to funds to carry out that plan.
The project is held by Kwanika Copper Corp., a private company held jointly by Serengeti Resources, which has a 65% interest, and POSCO Daewood, which owns the other 35%.
The Stardust Project is located approximately 150 km north of Fort St James.