Intergeo MMC Ltd., a mining company controlled by Russian billionaire Mikhail Prokhorovs Onexim Group, agreed to acquire Vancouver-based copper producer Mercator Minerals Ltd. to gain a listing in Canada.
Mercator will be renamed Intergeo Mining Ltd., with Intergeo shareholders owning about 85% and Mercator investors about 15%, Onexim said today in an e-mailed statement, without disclosing financial terms.
Intergeo will benefit from access to public capital markets to develop its attractive projects, Onexim said, citing Ak-Sug, a copper-porphyry deposit in Russias Tyva region. The venture is among its largest, with about 1.8 million metric tons of copper resources, company data show.
The transaction also gives Intergeo access to Mercators Mineral Park mine in Arizona, which produces copper, molybdenum and silver, as well as two projects in Mexico: El Pilar and El Creston. Mercator, whose shares have plunged 91% this year as the company struggled to repay debt, said Sept. 30 it hired BMO Capital Markets to advise on a potential sale or merger. Its market value was about $13.4 million yesterday.
John Lill, Intergeos chief executive officer, will head the combined company. Intergeo was planning an initial public offering in Canada in 2012. It postponed the sale, citing an unfavorable market.
Intergeos direct owner, Daselina Investments Ltd., will advance as much as $14 million to Mineral Park Inc., a Mercator unit, in a bridge loan to fund its operations until the transaction is completed, Mercator said in a separate statement.
Daselina agreed to invest $100 million, including the loan, plus interest accrued on those borrowed funds, in the combined company through a private placement at $0.1224 a share, Mercator said. Mercator must remain listed in Toronto as a condition for the deal.
Intergeo shareholders Daselina and Kirkland Intertrade Corp. will receive about 8.35 common shares in the combined company for each Intergeo share, according to Mercator. They will also get one special share that provides rights including the nomination of as many as three directors in certain circumstances, and the appointment of the chairman and CEO.
Mercators board supports the transaction and recommends that shareholders vote in favor of it, the company said in its statement. Intergeos world-class Ak-Sug copper project provides a compelling growth opportunity, with a geologic profile similar to other recent high-profile discoveries and operating assets in Central Asia, it said.
