PERTH (miningweekly.com) – ASX-listed junior Atlantic Gold on Monday announced its intention to merge with TSX-listed Spur Ventures.

The two companies have signed a heads of agreement, under which Spur would acquire all the ordinary shares of Atlantic. Atlantic shareholders would receive 0.05564 of a common share in Spur and 0.02782 of a share purchase warrant in Spur for each Atlantic share held.

Each of the share purchase warrants would be exercisable for a period of four years from the closing date of the transaction, at an exercise price of C$0.60 each.

Atlantic said that the proposed transaction placed at 3.5c-a-share value on the company’s shares, which was a 30% premium over the closing price on April 4 and a 16.5% increase over the 20-day volume-weighted average price of Atlantic shares.

“We are delighted to have finalised the heads of agreement for the merger with Spur. The merger presents Atlantic shareholders with a most important first step towards the funding of the development of the Touquoy gold project, without the material dilution in the value of their shares that would have resulted, had we taken a capital raising of this size to the market,” said Atlantic chairperson Ronald Hawkes.

Atlantic has previously estimated that the development of its Touqouy project would require a capital investment of about $142-million to produce 84 000 oz/y of gold, over a five-year mine life.

Hawkes noted that the merger would also reposition Atlantic’s Nova Scotia gold assets and its holding of exploration properties in a Canadian company with a TSX-V listing.

If Atlantic’s shareholders fail to approve the merger, an alternate to the scheme would be placed before shareholders, under which Atlantic would agree to sell Spur all the securities on issue in DDV Gold, the Canadian subsidiary of Atlantic which holds its assets in that country.

In exchange for the DDV Gold securities, Atlantic would be issued with the same number of Spur shares and warrants that would have otherwise been issued under the merger.

Meanwhile, Spur has agreed to replace Atlantic’s exiting A$1-million debt with a C$1-million loan facility, which can be drawn down in July this year, upon the execution of an implementation agreement for the merger.