Canadian Arrow Mines Ltd. and Ursa Major Minerals Inc. are considering a strategic merger that would lead to the creation of a mid-tier nickel producer in Ontario.
The companies said Monday they envision an equity swap that would have Ursa Major buy Canadian Arrow.
The combined company's board would have three members nominated by Ursa Major and two by Canadian Arrow. Representatives of the two companies would also hold senior management positions.
Ursa chief executive Richard Sutcliffe would be chairman of the board and CEO of the combined company while Canadian Arrow president Kim Tyler would be president and chief operating officer.
The combined company would have reserves and resources containing an estimated 200 million pounds of nickel, plus significant copper and precious metal by-products.
Ursa would exchange one of its shares in return for 1.5 Arrow share, subject to a price adjustment if certain conditions aren't met. All Arrow options and warrants would be exchanged for Ursa options on the same basis and Ursa's existing options would remain intact.
"This merger is a key step in our goal of becoming a mid-tier nickel producer," Sutcliffe said in a statement.
Ursa's main asset is the Shakespeare nickel project in the Sudbury area, a fully permitted open-pit nickel-copper sulphide deposit containing over 86 million pounds of nickel.
Canadian Arrow's main asset is the Kenbridge nickel-copper sulphide deposit, 70 km southeast of Kenora, Ont., containing over 98 million pounds of nickel.
Canadian Arrow CEO Dean MacEachern said his company anticipates increased exposure to the platinum-group precious metals as a result of a Ursa combination "as well as the operational flexibility to take rapid advantage of improved market conditions."
Each company's board has agreed not to solicit other proposals during their exclusive agreement and each has agreed to a $400,000 reciprocal break fee provision.
Canadian Arrow shares traded at 6.5 cents on the TSX Venture Exchange at midday Monday. Ursa Major shares haven't traded since May 21, when they closed at 14 cents on the Toronto Stock Exchange.
Source: Canadian Press
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