The merger between Bonterra Resources (BTR.V) and Metanor Resources (MTO.V) remains on track, and the companies have now entered into a C$4M loan agreement. Bonterra will advance C$4M (at a 10% interest rate) to Metanor, which will use the cash for general working capital purposes whilst both companies are working towards completing their merger.
Both companies previously announced Bonterra will acquire Metanor Resources in an all-share deal by issuing 1.6039 shares of Bonterra per share of Metanor Resources (At Bonterra’s recent closing price of C$0.35, this represents approximately C$0.56 per share of Metanor). This seems to be a good deal for Bonterra as it acquires an operating asset (the Bachelor Lake mine and mill), an exploration asset (the Barry project), and perhaps even more important, a skilled underground labour force, which could be a very important part of bringing its own Gladiator gold project into production without any major initial start-up issues.
As Metanor is currently trading at a discount to the implied value of C$0.56, buying Metanor stock could be seen as ‘buying Bonterra at a discount’. Purchasing Metanor stock at C$0.53 will result in receiving Bonterra stock at a deemed value of C$0.33 per share, but this excludes the value of the Larder Lake SpinCo.
Right before completing the acquisition of Metanor, Bonterra Resources will spin out its Larder Lake project (including C$7M in cash) to its existing shareholders. The shareholder vote for both companies (Metanor shareholders need to vote on the deal, Bonterra shareholders need to vote on the spin-off plans) has been scheduled for September 18th.
Go to Bonterra’s website
The author has a long position in both Bonterra and Metanor. Please read the disclaimer
