Champion Iron Mines (CHM.TO) has announced it entered into a definitive agreement with Mamba Resources (ASX:MAB) whereby Mamba’s Canadian subsidiary will acquire all outstanding shares of Champion Iron Mines. For every 11 shares in Champion, shareholders will receive 15 shares of Mamba Resources which is a 72% premium based on the 20 day VWAP right before the transaction was announced.
Right after the effective date of the arrangement, Mamba will raise at least A$10M at A$0.50/share, where after the combined entity will have a total cash position of C$25M.
We think this transaction has its merits, as Mamba will now combine the strength of its board with the advanced-stage Fire Lake North project owned by Champion Iron Mines. As the combined entity will have C$25M in cash, the new company will be in an excellent position to continue exploration at the Snelgrove Lake project (where Mamba is earning a 100% interest from Altius Minerals (ALS.TO)) and the development of the Fermont Iron project.
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Disclosure: The author holds no position in Champion Iron Mines or Mamba Resources. Please see our disclaimer for current positions.
