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.
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
- 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
- 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
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.
SOURCE Mercator Minerals Ltd.
For further information: For further information: Mercator Minerals Ltd: Marc S. LeBlanc, VP Corporate Development, Tel: (604) 981-9661, Fax: (604) 960-9661, firstname.lastname@example.org, www.mercatorminerals.com; Stingray Copper Inc.: Peter Mordaunt, Chairman and Chief Executive Officer, Tel: (416) 368-6240, Fax: (416) 368-7141, email@example.com, www.stingraycopper.com