Vancouver's Magellan Minerals Ltd. (TSX-V:MNM) plans to merge with Cranbrook-based Chapleau Resources Ltd. (TSX-V:CHI) in an all-share deal that would create a combined gold exploration and development company focused in northern Brazil.
Under the agreement, Magellan has agreed to offer Chapleau shareholders 0.267 Magellan shares for each Chapleau share, which values the deal at approximately $16.6 million. If the merger is completed, Magellan will have approximately 55.8 million shares outstanding, and Magellan shareholders will own approximately 55% of the company.
The deal would combine both companies' gold projects in Brazil: Chapleau's Coringa and Magellan's Cuiu-Cuiu.
The merger will also combine the management of both companies. Alan Carter, Magellan's president and CEO, will remain the top executive of the combined company; Chapleau's president, Ian Gendall, will become COO. Jim Stypula, Chapleau's president, will become chairman of the new entity.
The deal is expected to close in mid-July, subject to shareholder and regulatory approval and other customary closing conditions.
Magellan's share price range during the past week: between $0.55 and $0.67; 52-week high: $1.60; 52-week low: $0.11.
Chapleau's share price range during the past week: between $0.16 and $0.20; 52-week high: $0.46; 52-week low: $0.08.