Cygnus Metals (ASX:CY5) announced plans to merge with Doré Copper Mining (TSXV:DCMC,OTCQB:DRCMF), saying it will acquire 100 percent of Doré’s issued and outstanding common shares via a definitive arrangement.
In an October 15 press release, Cygnus said the deal will create a Québec-focused copper and lithium company, with Doré’s Chibougamau copper-gold project and Cygnus’ James Bay lithium projects as its main assets.
The new entity sees the potential for resource growth, as well as brownfield and greenfield discoveries at the properties. Chibougamau has a resource of 10.8 million tonnes at 3.5 percent copper equivalent, while the James Bay-based Pontax project has a resource of 10.1 million tonnes at 1.04 percent lithium oxide.
The Chibougamau project has the only processing facility within a 250 kilometre radius. The plan is to implement a “hub-and-spoke” strategy where this facility will be used to process material from various nearby deposits.
“The Doré team is delighted at the thought of working with the Cygnus team to create a critical metals company and to maximise the value of what we know is an outstanding asset at Chibougamau,” said Doré President and CEO Ernest Mast.
“This merger will provide the funding, additional expertise and the strategy to hopefully generate superior shareholder returns through brownfields exploration at Chibougamau,’ he added.
Cygnus said it intends to raise AU$11 million through a placement with two tranches. It will use the funds for resource and production advancement at Chibougamau, and development of the lithium exploration pipeline at James Bay.
“We intend to devise and implement an aggressive exploration programme, utilising highly experienced geologists and the latest technology, with the aim of driving strong resource growth at a time when the world desperately wants more copper from tier-one locations,” explained Cygnus Executive Chair David Southam.
The transaction is expected to close at the end of December. It is subject to various conditions, including the receipt of conditional approval from the TSXV for the listing of Cygnus’ shares. Once complete, Cygnus shareholders will own 55 percent of the merged group, while Doré shareholders will hold 45 percent.
Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.