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VANCOUVER, April 12 /CNW/ --
VANCOUVER, April 12 /CNW/ - Mercator Minerals Ltd. (TSX: ML)
("Mercator") and Creston Moly Corp. (TSXV: CMS) ("Creston") are pleased
to announce that they have entered into a definitive arrangement
agreement pursuant to which Mercator will acquire all the outstanding
common shares of Creston by way of a plan of arrangement.
Under the plan of arrangement, shareholders of Creston will receive 0.15
of a common share of Mercator and $0.08 in cash, in respect of each
common share of Creston. This represents an implied premium of 43% and
40% based on each company's closing price and 20-day volume weighted
average share price, respectively, as at April 8, 2011 (the last full
day of trading for Creston prior to announcement). The proposed
transaction values Creston at approximately C$195 million.
The board of directors and management of the combined company will draw
from the expertise of both companies. Mr. Gavin Thomas will continue
as Non-Executive Chairman. Mr. Bruce McLeod (current President and CEO
of Creston) will become President and CEO of the combined company. Mr.
Michael Surratt (current President and CEO of Mercator) will continue
to work with the combined company, on a consultancy basis, as Technical
Advisor to the President and CEO. Mr. Mark Distler will continue in
his current role as CFO of the combined company. The combined board of
directors will be comprised of Gavin Thomas (Non-Executive Chairman),
Bruce McLeod (President and CEO), Colin K. Benner, Joseph Keane,
Stephen Quin, Robert Quinn, Ron Vankoughnett and one additional
independent director to be appointed at a future date.
Creston owns a 100% interest in El Creston, an advanced
development-stage moly-copper project located in Sonora, Mexico. El
Creston has a Measured and Indicated resource of 336 million pounds of
molybdenum and 281 million pounds of copper which will increase
Mercator's Measured and Indicated molybdenum resource by 85% to 732
million pounds (141% and 956 million pounds including Creston's Moly
Brook and Ajax projects) and its Measured and Indicated copper
equivalent resource by 38% to 7,781 million pounds (62% and 9,098
million pounds including Creston's Moly Brook and Ajax projects).
Creston recently completed a preliminary economic assessment on the El
Creston project which indicated robust economics based on a molybdenum
and copper price of US$15.00/lb and US$2.60/lb, respectively (vs.
current spot molybdenum and copper prices of US$17.10/lb and
US$4.38/lb). The project is expected to generate average annual
production of approximately 24 million pounds of molybdenum and
approximately 16 million pounds of copper over a 13 year mine life.
The preliminary economic assessment indicated an after-tax NPV(8%) of over US$560 million and an IRR of approximately 22%.
Mr. Michael Surratt, current President and CEO of Mercator, stated: "By
adding a world-class development asset like El Creston to our
portfolio, we are establishing an attractive and continuous growth
pipeline commencing with the Phase II Expansion at Mineral Park in July
2011, followed by the development of El Pilar in 2012 and then El
Creston in 2013. We see this as a significant first step towards
creating a strong intermediate base metals company with an attractive
growth profile. Bruce McLeod is well known to the capital markets and
has a proven track record of creating shareholder value. I am excited
that he has agreed to take the combined company to the next stage in
its evolution."
Mr. Bruce McLeod, current President and CEO of Creston, stated: "The
proposed transaction delivers an immediate and significant premium to
our shareholders. Moreover, it provides our shareholders with the
opportunity to participate in the enormous growth potential of the
combined portfolio of producing and development assets. This
transaction will create a significant copper-moly company with an
industry-leading growth profile and the management resources, capital
markets profile and access to capital necessary to realize on the full
potential of its portfolio. I am excited by the prospects we have ahead
of us and I look forward to continuing to create shareholder value for
the combined shareholder base in my new role."
The board of directors of Mercator would like to recognize and express
its gratitude to Mr. Surratt for his years of service to Mercator.
Under Mr. Surratt's leadership, Mercator has assembled one of the most
experienced operating teams in the industry, completed the acquisition
of a major copper development project in El Pilar and grown the Mineral
Park mine from a small copper heap leach operation in 2003 into one of
the largest new mines in North America. While Mr. Surratt has decided
to retire from the position of President and CEO, the board is pleased
that he has agreed to continue in a consulting capacity to the new
President and CEO, where his experience will benefit the operations at
Mineral Park as well as the development activities at Mercator's two
Mexican projects.
Transaction Details
The proposed transaction will be carried out by way of a plan of
arrangement, the implementation of which will be subject to approval by
at least 66 2/3% of the votes cast at a special meeting of Creston
shareholders that is expected to be held in mid to late June 2011
followed by and subject to the approval of the Supreme Court of British
Columbia. Pursuant to the terms of the arrangement agreement between
Mercator and Creston, the proposed transaction is also subject to
applicable regulatory approvals and the satisfaction of certain closing
conditions customary for transactions of this nature. The arrangement
agreement also provides for, among other things, customary board
support and non-solicitation covenants from Creston (subject to
customary "fiduciary out" provisions that entitle Creston to consider
and accept a superior proposal and a 5 calendar day "right to match" in
favour of Mercator). The arrangement agreement also provides for the
payment of a termination fee of C$5.5 million to Mercator and the
payment of an expense reimbursement fee of C$5.5 million to Creston if
the proposed transaction is not completed in certain specified
circumstances.
The board of directors of Creston, after receiving the recommendation of
its special committee and consultation with its financial and legal
advisors, has unanimously determined that the proposed transaction is
in the best interests of Creston, is fair to the shareholders of
Creston, and to recommend that shareholders of Creston vote in favour
of the proposed transaction. BMO Capital Markets, financial advisor to
Creston and its board of directors, has provided an opinion to the
effect that the consideration to be received by shareholders of Creston
is fair, from a financial point of view, to shareholders of Creston.
All of the directors and senior officers of Creston have entered into
customary voting support agreements pursuant to which, among other
things, they have agreed to vote their common shares of Creston
(representing approximately 3.2% of the outstanding common shares of
Creston) in favour of the proposed transaction. In addition, certain
other shareholders of Creston holding approximately 8.3% of the
outstanding common shares of Creston have entered into customary voting
support agreements pursuant to which, among other things, they have
agreed to vote their common shares of Creston in favour of the proposed
transaction. Upon closing, outstanding options and warrants to purchase
common shares of Creston will entitle the holders to common shares of
Mercator with the number of common shares and/or exercise price
adjusted, as appropriate, to reflect the consideration to be received
by shareholders of Creston pursuant to the plan of arrangement.
The terms and condition for the proposed transaction will be summarized
in Creston's management information circular, which will be filed and
mailed to shareholders of Creston in early to mid May 2011. If it is
approved by shareholders of Creston, it is anticipated that the
proposed transaction will be completed in late June 2011.
Copies of the arrangement agreement between Mercator and Creston and
certain related documents will be filed with Canadian securities
regulators and will be available on the SEDAR website at www.sedar.com. The management information circular will also be available at www.sedar.com.
Advisors and Counsel
Haywood Securities Inc. is acting as financial advisor to the special
committee of the board of directors of Mercator. DuMoulin Black LLP is
acting as legal advisor to Mercator. Gowling Lafleur Henderson LLP is
acting as legal advisor to the special committee of the board of
directors of Mercator.
BMO Capital Markets is acting as financial advisor to Creston and its
board of directors. Morton & Company is acting as legal advisor to
Creston. McCarthy Tetrault LLP is acting as legal advisor to the
special committee of the board of directors of Creston.
Conference Call
Mercator and Creston will hold a joint conference call to discuss the
proposed transaction at 7:00 am Pacific Time (10:00 am Eastern Time) on
Tuesday, April 12, 2011. To participate, please use the following
conference call details:
Local dial in number: (647) 427-7450
Toll-free dial in number: (888) 231-8191
Passcode: 59407385
The call will also be webcast live by CNW Group and can be accessed at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3481720. The call and presentation can be accessed at Mercator's or Creston's
websites at www.mercatorminerals.com or www.crestonmoly.com, respectively. The call will also be available for replay by dialing
(toll free) 1-800-642-1687 or 416-849-0833 (Passcode 59407385 followed
by the number sign) for 14 days.
NI-43-101 Qualified Persons
Gary Simmerman, BSc., Mercator's VP Engineering, a NI 43-101 Qualified
Person, supervised the preparation of and verified the Mineral Park
technical information contained in this release.
Mike Broch, BSc, Geology, Msc, Economic Geology, FAusIMM, Mercator's VP
Exploration, a NI 43-101 Qualified Person, supervised the preparation
of and verified the El Pilar technical information contained in this
release.
Dave Visagie, P. Geo, Creston's Exploration Manager, a NI 43-101
Qualified Person, supervised the preparation of and verified the El
Creston 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 at the
Mineral Park Mine and the development of the El Pilar copper project in
Mexico.
About Creston Moly Corp.
Creston is a mineral exploration company focused on the exploration and
development of the El Creston Property in Sonora, Mexico, of which the
Company holds a 100% interest.
Cautionary Statements
The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this press release.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of
the TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
None of the securities anticipated to be issued under the plan of
arrangement have been or will be registered under the Securities Act of
1933, as amended, or any state securities laws, and such securities are
anticipated to be issued in the United States pursuant to exemptions
from such registration requirements. This press release shall not
constitute an offer to sell or solicitation of an offer to buy any
securities in any jurisdiction where such an offer or sale would be
unlawful.
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 Creston by
Mercator, the potential benefits thereof, discussions of future plans,
projections and objectives, estimates, forecasts, and statements as to
management's expectations with respect to, among other things, the size
and quality of the Company's mineral reserves and mineral resources,
future production, capital and mine production costs, demand and market
outlook for commodities, and the financial results of the Company and
discussions of future plans, projections and objectives. In addition,
estimates of mineral reserves and mineral resources may constitute
forward looking statements to the extent they involve estimates of the
mineralization that will be encountered if a property is developed.
Important factors that may cause actual results to vary include, but
are not limited to, certain transactions, certain approvals, changes in
commodity and power prices, changes in interest and currency exchange
rates, inaccurate geological and metallurgical assumptions (including
with respect to the size, grade and recoverability of mineral reserves
and resources), unanticipated operational difficulties (including
failure of plant, equipment or processes to operate in accordance with
specifications, cost escalation, unavailability of materials and
equipment, delays in the receipt of government approvals, industrial
disturbances or other job action, and unanticipated events related to
health, safety and environmental matters), political risk, social
unrest, and changes in general economic conditions or conditions in the
financial markets. These risks are described in more detail in
Mercator's Annual Information Form. Mercator does not assume the
obligation to revise or update these forward-looking statements after
the date of this report or to revise them to reflect the occurrence of
future unanticipated events, except as may be required under applicable
securities laws. For a more complete discussion, please refer to the
Mercator's Annual Information Form and audited financial statements and
MD&A for the year ended December 31, 2010 on the SEDAR website at www.sedar.com.
This news release also contains forward looking statements of Creston.
Forward looking statements relate to future events or future
performance and include, but are not limited to, statements with
respect to the completion of the proposed transaction, estimation of
mineral reserves and resources, the realization of mineral reserve
estimates, the timing and amount of estimated future production, costs
of production, capital expenditures, success of mining operations,
environmental risks, unanticipated reclamation expenses, title disputes
or claims and limitations on insurance coverage. In certain cases,
forward-looking statements can be identified by the use of words such
as "plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words and
phrases or statements that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur" or "be achieved"
or the negative of these terms or comparable terminology.
Forward-looking statements reflect Creston management's expectations or
beliefs regarding future events and are based on the assumptions that
the proposed transaction will complete and that Creston's exploration
and development properties will achieve anticipated milestones and
results, and rely on Mercator's public disclosure regarding its mineral
projects. By their very nature, forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual events, results, performance or achievements of
Creston to be materially different from any future events, results,
performance or achievements expressed or implied by the forward-looking
statements. Such factors include, among others, risks related to
completion of the proposed transaction, actual results of current
exploration activities; changes in project parameters as plans continue
to be refined; future prices of resources; possible variations in ore
reserves, grade or recovery rates; accidents, labour disputes and other
risks of the mining industry; delays in obtaining governmental
approvals or financing or in the completion of development or
construction activities; as well as those factors detailed from time to
time in Creston's interim and annual financial statements and
management's discussion and analysis of those statements, all of which
are filed and available for review on SEDAR at www.sedar.com. Although Creston has attempted to identify important factors that
could cause actual actions, events or results to differ materially from
those described in forward-looking statements, there may be other
factors that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. These forward-looking statements are made as of the date
of this news release and Creston does not intend, and does not assume
any obligation, to update these forward-looking statements, except as
required by applicable law. Accordingly, readers should not place undue
reliance on forward-looking statements.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/April2011/12/c3318.html
table valign="top" border="0" tr td bInvestor Relations /bbr/ br/ /td td /td td /td td /td td /td td /td /tr tr valign="top" td align="left" Mercator Minerals Ltd.br/ 1971 Sandown Placebr/ North Vancouver, BC, Canada V7P 3C3br/ Tel: 604-981-9661br/ Fax: 604-960-9661br/ a href="mailto:mleblanc@mercatorminerals.com"mleblanc@mercatorminerals.com/abr/ a href="http://www.mercatorminerals.com"www.mercatorminerals.com/a /td td /td td /td td /td td /td td align="left" Creston Moly Corp.br/ Suite 860 - 625 Howe Streetbr/ Vancouver, BC, Canada V6C 2T6br/ Tel: 604-694-0005br/ Fax: 604-684-9365br/ a href="mailto:info@crestonmoly.com"info@crestonmoly.com/abr/ a href="http://www.crestonmoly.com"www.crestonmoly.com/a /td /tr tr td br/ bMedia Contacts/bbr/ Wilcox Groupbr/ Tel: 647-707-9009br/ a href="mailto:mwilcox@wilcoxgroup.com"mwilcox@wilcoxgroup.com/a /td td /td td /td td /td td /td td /td /tr /table p /p