Sign up USA
Proactive Investors - Run By Investors For Investors

Champion Iron Mines strikes merger with O'Keeffe's Mamba Minerals

Champion Iron Mines strikes merger with O'Keeffe's Mamba Minerals

Champion Iron Mines (TSE:CHM) has agreed to merge with Australian-listed Mamba Minerals (ASX:MAB) in an all-share deal that values the company at C$59.8 million. 

The deal will create a new iron company to be named Champion Iron Limited that will trade both in Australia and Toronto, giving it access to a broader investor base. 

Under the terms of the transaction, Champion shareholders will get 11 ordinary Mamba shares in exchange for every 15 shares of Champion, valuing Champion at 39 Canadian cents per share. Champion closed on Thursday at 27.5 cents, rising 22% in Friday morning deals to 33.5 cents. 

Once the deal is closed -- expected in April of next year -- Champion shareholders will own about 50.5% of Mamba's pro forma issued share capital, the parties said. 

Champion said the merger will provide a strengthened balance sheet, with enough funds for the completion of the bankable feasibility study at its Fire Lake North project in Quebec, as well as key mining execs like the addition of mining entrepreneur Michael O'Keeffe as executive chairman. O'Keeffe, Mamba's current chairman, sold his previous coal venture to Rio Tinto for $4 billion.

The deal will also bring substantial exploration upside in the form of the Snelgrove Lake project in the Labrador Trough region in Canada, a potential multi-billion tonne magnetite property.

As a precondition to the merger, Mamba must raise at least A$10 million through an equity financing, to be completed immediately following the closing date of the deal, at a price of at least A$0.50 per share. The pro forma company will have a cash balance of about C$25 million in the bank, the miners said. 

"This merger represents an excellent opportunity for Champion shareholders to realize immediate and substantial value by exchanging their Champion shares for Mamba shares and yet retain the opportunity to participate in the development of the Consolidated Fire Lake North project," said Champion president and CEO Thomas Larsen in a statement Friday.

"Mr. O'Keeffe and his team at Mamba have an outstanding track record in developing and financing bulk commodity infrastructure projects, and I am excited at the opportunity to work with Mr. O'Keeffe to deliver the significant value and potential that we confirmed in the Consolidated Fire Lake North Project."

O'Keeffe will transition to executive chairman of the combined company, while Larsen will become the CEO. 

O'Keeffe said the immediate focus at Fire Lake will be to upgrade the prefeasibility study done earlier this year to a bankable feasibility report, which is expected in the next year. 

"At the same time we will be positioning the merged group to be able to access or develop the infrastructure required to fund and put this project into production, and there is a real opportunity here to join the ranks of Canada's existing iron ore producers," added O'Keeffe. 

The new board will comprise of eight directors, including five nominees from Champion and three from Mamba. The deal requires regulatory and shareholder approvals, with about 7% of stockholders from each company already agreeing to vote in favour of the merger. 

View full CHM profile View Profile

Champion Iron Mines Timeline

Related Articles

picture of mining hammer
May 31 2017
Beaufort Securities estimates Katoro’s risk-adjusted equity value at £12.7mln or 11.7p per share
Marble lobby
June 07 2017
Has Fox Marble finally turned the corner? Recent news flow has been positive and Mother Nature seems to have taken the company off her hit list.
Sweden-focused Leading Edge Materials delivering in the high tech materials arena
October 05 2017
The group has just announced plans to list on the Nasdaq First North Stockholm...

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You understand that the Company receives either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate.

You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Copyright © Proactiveinvestors.com, 2017. All Rights Reserved - Proactive Investors North America Inc., Proactive Investors LLC

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use