Mercator Minerals Ltd. executed a major mill expansion at one of North America's largest copper-molybdenum operations at breakneck speed, and now the Vancouver company reckons a growth spurt will do it wonders.
Mercator (TSX:ML) and Toronto-based Stingray Copper Inc. (TSX:SRY) have agreed to a $44 million friendly business combination that would give the Vancouver company increased leverage to copper, a commodity used in everything from plumbing to electrical wiring.
Stingray's activities are focused in Mexico on its El Pilar copper exploration project, for which an April 2009 feasibility study indicated positive economics for development as a low-cost open pit mine.
The project will add a low cash cost and near-term cathode copper producing asset to Mercator's portfolio and additional annual copper production of approximately 70 million pounds per year starting in 2012.
Mercator owns the Mineral Park mine in Arizona, where a mill expansion was completed in under two years, making the facility one of the most modern in North America.
Stingray, whose shareholders have been offered a 51.6% premium based on the closing price of their shares on October 1, will get a partner with the ability to finance El Pilar.
"This business combination will improve access to capital markets and financing alternatives for the El Pilar Project," said Peter Mordaunt, Stingray's chairman and CEO.
The boards of directors of both companies have unanimously approved the terms of the all-stock transaction.
Mordaunt will become president and COO of the combined company and Michael Surratt, Mercator's current president and CEO, will remain CEO.