Mercator Minerals and Stingray Copper announce friendly business combination
VANCOUVER, Oct. 2 /CNW/ - Mercator Minerals Ltd (TSX -ML) and Stingray
Copper Inc. (TSX -SRY) are pleased to announce joint execution of a binding
agreement to complete a business combination (the "Transaction"), by way of a
plan of arrangement or other form of business combination. Under the
agreement, Mercator will acquire all of the issued and outstanding shares of
Stingray at an agreed exchange ratio of 0.25 Mercator shares per Stingray
share. This represents a 51.6% premium to Stingray shareholders based on the
closing price of both companies as of October 1, 2009 and a 71.4% premium to
Stingray shareholders based on the 20-day volume weighted average share price
("VWAP") of both companies. The Transaction is expected to close before the
end of the year and, upon closing, Stingray shareholders will hold
approximately 8% of the combined company. The boards of directors of Mercator
and Stingray have unanimously approved the terms of the Transaction.
The board and management structure of the combined company will draw on
the expertise of both companies and the combined board will comprise the
current Mercator directors and two nominees of Stingray - Peter Mordaunt and
Joseph Keane. Michael Surratt, current President and CEO of Mercator will
remain CEO of the combined company and Peter Mordaunt, current CEO and
Chairman of Stingray will become President and COO of the combined company.
Michael Surratt, President and CEO of Mercator stated, "This transaction
will substantially increase Mercator's leverage to copper and represents a
robust development opportunity for shareholders, subsequent to the completion
of the Mineral Park Phase II expansion at the end of 2010".
Peter Mordaunt, CEO and Chairman of Stingray stated, "This business
combination will improve access to capital markets and financing alternatives
for the El Pilar Project. Stingray Shareholders are receiving an attractive
premium and will participate in the development of Mercator's Mineral Park."
A conference call to discuss the transaction will be held at 11:00 AM
Toronto time (8:00 AM Vancouver time) on Friday, October 2, 2009 to allow
shareholders, securities analysts, and investors the opportunity to hear
management discuss the business transaction outlined herein. The call can be
accessed by dialing (toll free) 1-800-594-3790 or at 416-644-3425. The call
will also be webcast live by CNW Group and can be accessed at
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2828540. The call and
presentation can be accessed at Mercator's or Stingray's websites at
www.mercatorminerals.com or www.stingraycopper.com, respectively. The call
will also be available for replay by dialing (toll free) 1-877-289-8525 or
416-640-1917 (Passcode 4169147 followed by the number sign) for 14 days.
Transaction Rationale
Mercator and Stingray believe the Transaction will provide significant
benefits for both companies' shareholders.
Mercator's shareholders will gain exposure to:
- Stingray's El Pilar project adds a low cash cost and near-term
cathode copper producing asset with manageable CAPEX
- Increases Mercator's leverage to copper
- Additional annual copper production of approximately 70 million
pounds per year starting in 2012
- Provides asset diversification, increasing Mercator's planned
production and lowering long term cash costs
- 112% increase (1.5 billion lbs) in copper reserves acquired at less
than US$0.02/lb
- Potential for expansion with oxide deposit open along strike and
to the south
- Access to a fully dedicated technical and operating team with
extensive knowledge of SX/EW process
- Team in place to build El Pilar and assist with Mineral Park
- Geographic synergies given proximity of Mineral Park, in Arizona, to
El Pilar in northern Mexico
- Fills project development gap with the completion of Mineral Park
Phase II expansion coinciding with El Pilar construction start
- Highly accretive on all valuation and operating metrics
Benefits to Stingray's shareholders include:
- Significant premium of 52% offered to Stingray shareholders based on
October 1, 2009 closing share price
- Transition from a development stage company to a high growth profile
producer, garnering improved valuation multiples
- Offers a partner with the ability to finance El Pilar through a
combination of internally generated cash flow, debt and equity
- Enhanced commodity exposure and participation in recovering
molybdenum prices
- Enhanced liquidity, capital markets profile and research coverage
- Geographic synergies given proximity of Mineral Park, in Arizona, to
El Pilar in northern Mexico
- Accretive to Stingray relative to current financing options
Transaction Details
Mercator and Stingray anticipate the business combination will be
completed by way of statutory plan of arrangement whereby Mercator would
acquire all of the issued and outstanding shares of Stingray in consideration
for the issue of Mercator shares on the basis of 0.25 Mercator shares for one
Stingray share.
The Transaction would be subject to certain standard conditions including
that not less than 662/3% of the issued and outstanding shares of Stingray
being voted at a shareholders meeting being in favour of the transaction.
The Board of Directors of both Stingray and Mercator unanimously support
the proposed Transaction. Stingray Management and directors have entered into
lock up agreements to support the transaction comprising approximately 6% of
Stingray's outstanding shares. Mercator has entered into lock up agreements
with a major shareholder of Stingray representing approximately 15% of the
issued shares of Stingray. Under the lock up agreements each of the locked up
shareholders has agreed to vote all of their shares of Stingray in favour of
the Transaction.
Full details of the offer will be included in a formal Arrangement
Agreement and will be described in a Management Information Circular to be
filed with the regulatory authorities and mailed to Stingray shareholders in
accordance will applicable securities laws.
Haywood Securities Inc. ("Haywood") is acting as financial advisor to the
Special Committee of Mercator (comprised of Independent Directors). Haywood
has provided an opinion to the Special Committee of Mercator that, subject to
certain assumptions and limitations set out therein, the proposed transaction
is fair, from a financial point of view to Mercator shareholders. DuMoulin
Black LLP is acting as legal advisor to Mercator. Gowlings LaFleur Henderson
LLP is acting as legal advisor to the Special Committee of Mercator.
Stingray has engaged Canaccord Capital Inc. as its financial advisor,
Lavery, de Billy, L.L.P. as its legal advisor and an Independent Committee of
Stingray Directors recommended the approval of the transaction.
Gary Simmerman, BSc., Mercator's VP Engineering, a Qualified Person as
defined by NI43-101, supervised the preparation of and verified the Mercator
technical information contained in this release.
Peter Mordaunt, P.Geo. Stingray's Chairman and CEO, a Qualified Person as
defined by NI43-101, supervised the preparation of and verified the Stingray
technical information contained in this release.
About Mercator Minerals Ltd.
Mercator Minerals Ltd. is a TSX listed mining company with an experienced
management team that has brought the mill expansion at the Mineral Park Mine,
one of the largest and most modern copper-moly mining-milling operations in
North America to production in less than 2 years. Mercator management is
dedicated to maximizing profits by making its Mineral Park Mine one of the
lowest cost operations in the industry.
About Stingray Copper Inc.
Stingray Copper Inc. is a TSX listed copper development corporation with
its activities focused at the El Pilar copper project located in the Cananea
copper trend of Sonora, Mexico. An April 2009 Feasibility Study at this
project indicated positive economics for development as a low cost, open pit
mine with a solvent extraction and electro-winning plant to treat the 230
million tonne oxide mineral reserve.
The Toronto Stock Exchange does not accept responsibility for the
adequacy or accuracy of this press release.
Information Concerning Mineralization and Resources
Unless otherwise indicated, all resource estimates contained in this news
release have been prepared in accordance with National Instrument 43-101
Standards of Disclosure for Mineral Projects and the Canadian Institute of
Mining, Metallurgy and Petroleum Classification System in compliance with
Canadian securities laws, which differ from the requirements of United States
securities laws. Without limiting the foregoing, this news release uses the
terms "measured resources", "indicated resources" and "inferred resources".
United States investors are advised that, while such terms are recognized and
required by Canadian securities laws, the United States Securities and
Exchange Commission ("SEC") does not recognize them. Under United States
standards, mineralization may not be classified as a "reserve" unless the
determination has been made that the mineralization could be economically and
legally produced or extracted at the time the reserve determination is made.
United States investors are cautioned not to assume that all or any part of
measured or indicated resources will ever be converted into reserves.
Further, inferred resources have a great amount of uncertainty as to their
existence and as to whether they can be mined legally or economically. It
cannot be assumed that all or any part of the inferred resources will ever be
upgraded to a higher category. Therefore, United States investors are also
cautioned not to assume that all or any part of the inferred resources exist,
or that they can be mined legally or economically. Disclosure of contained
ounces is permitted disclosure under Canadian regulations; however, the SEC
normally only permits issuers to report resources as in place tonnage and
grade without reference to unit measures. Accordingly, information concerning
descriptions of mineralization and resources contained in this news release
may not be comparable to information made public by United States companies
subject to the reporting and disclosure requirements of the SEC.
Forward Looking Information
This news release contains forward looking statements of Mercator, being
statements which are not historical facts, including, without limitation,
statements regarding the proposed acquisition of Stingray by Mercator, the
potential benefits thereof and discussions of future plans, projections and
objectives. In addition, estimates of mineral reserves and resources may
constitute forward looking statements to the extent they involve estimates of
the mineralization that will be encountered if a property is developed. This
news release also contains forward looking statements of Stingray, which are
derived from publicly available documents. There can be no assurance that
such statements will prove accurate. Such statements are necessarily based
upon a number of estimates and assumptions that are subject to numerous risks
and uncertainties that could cause actual results and future events to differ
materially from those anticipated or projected. Important factors that could
cause actual results to differ materially from Mercator's or Stingray's
expectation are in the documents filed by Mercator and Stingray,
respectively, from time to time with the Toronto Stock Exchange and
provincial securities regulators, most of which are available at
www.sedar.com. Other than as required by applicable securities legislation,
Mercator and Stingray disclaim any intention and assumes no obligation to
revise or update any forward-looking statement even if new information
becomes available, as a result of future events or for any other reason.