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Rob McEwen’s Lexam Explorations to merge with VG Gold to create new Ontario focused gold explorer

Published: 14:42 29 Sep 2010 EDT

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VG Gold (TSX: VG, OTCQX: VGGCF) and Lexam Explorations (TSX-V:LEX), two exploration companies focused on the Timmins mining camp in Northern Ontario, are set to merge.  Both companies also share a common shareholder – Rob McEwen, who will invest CAD$5 million into the new company to maintain a majority stake in the combined entity.


The deal  will see VG Gold shareholders receive one share in the new company Lexam VG Gold for every share they currently hold, while Lexam shareholders will receive 2.1 shares for every share they hold in Lexam.  McEwen, who is currently Chairman and CEO of Lexam will be Chairman of the combined company, while Tom Meredith, current President and CEO of VG Gold will maintain his position the merged entity.


The two companies also confirmed that McEwan, who currently holds 49% of the equity in Lexam, will invest CAD$5 million by way of a private placement of 10.4 million shares at 48 cents per share.  The placement also includes a ½ warrant with an exercise price of CAD$1.00 per share for two years.  Post merger, McEwen will own 28% of the new company.


"Northern Ontario is an area that has been particularly kind to me and I am a firm believer that there remains a lot more gold to be found. By combining VG Gold and Lexam we are creating a vehicle that has excellent properties and a strong treasury, enabling the company to aggressively explore for the next major gold discovery," stated Rob McEwen, Chairman and CEO of Lexam.


Lexam VG Gold will have a significant land position around Goldcorp`s (TSX:G, NYSE:GG) Dome Mine and CAD$15 million in the bank to invest in further exploration efforts.

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