(Alliance News) - SolGold on Friday said it has entered into a friendly merger with Toronto-listed Cornerstone Capital Resources Inc, whereby SolGold will buy all of Cornerstone's shares.
The deal has been unanimously approved by the boards of SolGold and Cornerstone.
SolGold shares were up 10% at 19.28 pence each on Friday morning in London. Cornerstone closed at CAD2.63 in Toronto on Thursday, giving it a market cap of about CAD97.1 million. At it current price, SolGold has a market cap of GBP434.1 million.
Under the pact, Cornerstone shares will be exchanged for 15 SolGold shares for each Cornerstone common share held. If SolGold does not pay any part of the deal in cash, its shareholders will hold 80% of the new enlarged firm.
The firm noted the 80/20 split is consistent with the current effective exposure both companies have to the Cascabel project.
SolGold, if it chooses, can pay up to 20% of the consideration in cash.
"The merger of Cornerstone and SolGold will significantly strengthen the ability of the combined group to create value for shareholders by consolidating ownership of the Cascabel project along with a robust portfolio of other projects primarily across Ecuador," SolGold said.
SolGold Chief Executive Officer Darryl Cuzzubbo said: "This is an exciting value enhancing transaction for all stakeholders."
The paperwork for the deal will be filed in the fourth quarter of 2022.
SolGold is a Brisbane, Australia-based developer of copper-gold deposits in Ecuador. Cornerstone is a Canada-based mineral exploration company.
By Xindi Wei; xindiwei@alliancenews.com
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SolGold (SOLG)