The board of Caza Gold Corp (CVE:CZY) has recommended a takeover from sector peer Royal Road Minerals Ltd (CVE:RYR).
The two companies have interests in Latin America, and the combination would be a compelling one, the directors of both companies believe.
The agreed merger will see Royal Road offer Caza shareholders 0.16 of a Royal Road share in exchange for each Caza share held. Full acceptance of the offer, when it is made, would see Caza shareholders end up with 34% of the enlarged company.
The board of Caza has unanimously recommended acceptance of the proposed offer, while the company’s largest shareholder, Polygon Mining Opportunity Master Fund is also on-board with the idea, which means that holders accounting for just over 82% of Caza’s shares have indicated they are happy with the terms.
“This transaction has been in the making for some time and is intended to represent the first of a proposed series of evolutionary step-changes, as the company identifies regional exploration opportunities, plays to its strengths and moves toward realizing its aim of adding value by discovery and becoming Latin America’s premier exploration company,” said Dr Tim Coughlin, president and chief executive officer of Royal Road Minerals.
“Our initial footprint at La Golondrina in southern Colombia has led to other local deals and to the submission of more than 160,000 hectares in concession contract applications in Colombia, over what we believe is one of Latin America’s most prolific and prospective gold belts. The Caza acquisition would provide us with an additional portfolio of projects that would each be 100%-owned, prospective for porphyry copper-gold, iron-oxide copper-gold and epithermal gold-silver deposits, and located in Nicaragua, which is fast becoming known for its mineral potential,” Dr Coughlin added.
The deal is still in the due diligence stage at the moment, but all being well a formal offer will be forthcoming in due course, probably early in the New Year.
“Our plan is to make the offer so that all shareholders of Royal Road and Caza can benefit from a more diversified combined company, led by an experienced and dedicated management team with a proven track record in discovery, and which we believe will have greater financial and operational resources available to it than either company now has on its own,” the Royal Road boss said.
Shares in Royal Road rose 11.1% to C$0.10 on the news.