Pampa Metals (CSE:PM) has made a play for fellow Vancouver-based Rugby Resources (TSX-V:RUG) in tandem with a planned dual listing on the ASX and TSX Venture Exchange.
The explorer, which has a market capitalisation of C$13.3 million ($14.7 million), has executed a binding letter agreement to acquire all of the shares in Rugby in an all-scrip deal.
Pampa Metals is offering one of its own shares, at a deemed value of C$0.16, for every 6.4 Rugby shares held.
Rugby shares were trading at C$0.02 on the TSX Venture Exchange prior to news of the takeover, valuing the company at around C$6.3 million.
Pampa Metals will issue around 49.5 million shares worth just under C$8 million.
The aim of the tie-up is to create a South America-focused copper explorer with two potentially major discoveries in a prolific copper producing belt.
Rugby’s Cobrasco Copper-Molybdenum Project is located in Colombia within the Western Cordillera, a continuation of the prolific copper porphyry terrain that extends through Chile and Peru to the south, and Ecuador and Panama to the north.
The takeover is still subject to various conditions including Pampa Metals and Rugby entering into a definitive agreement following a 45-day exclusivity period, during which time both parties will complete due diligence.
Pampa Metals’ immediate plan if the takeover reaches completion is to continue exploration and advancement of its flagship Piuquenes Copper-Gold Project in Argentina as well as restart drilling at Rugby’s Cobrasco Project in Colombia.
Only three holes have ever been drilled at the Cobrasco project and they returned intercepts including 808m @0.42% copper and 79 parts per million (ppm) molybdenum and 754m @ 0.46% copper and 76ppm molybdenum.
On completion of the takeover, Pampa Metals will also undertake an initial assessment of Rugby’s Mantau iron oxide-copper-gold project in Chile.
Ahead of finalisation of the deal, Rugby shareholders will receive an interest in a newly-formed company, which will hold some of the company’s assets.
These assets will be a 20% joint venture interest in the Cobrasco Project, the El Zanjon and Venidero gold-silver projects in Argentina, a joint venture interest in the Georgetown Copper-Gold Project in Australia, and a 1.5% net smelter return royalty over the Mantau iron-oxide-copper-gold project.
Rugby shareholders will own all of the shares in the spin-out company and 38% of the outstanding shares of Pampa if the transaction goes ahead. At this stage Rugby does not plan to list the new company on any exchange.
Rugby CEO Bryce Roxburg will join Pampa’s board of directors, with the remainder of the Rugby directors to step down. Joseph van den Elsen will remain executive Chairman and CEO of Pampa Metals.
Write to Angela East at Mining.com.au
Images: Pampa Metals
