Prophecy Platinum Corp. (CVE:NKL) said Friday it has entered into a binding letter of agreement to acquire Ursa Major Minerals (TSE:UMJ) in an all-share transaction.
Prophecy said it will issue one common share for every 25 outstanding
common shares of Ursa. Ursa options and warrants will also be exchanged
for options and warrants of Prophecy.
The offer represents approximately $0.15 per common share of Ursa
based on Prophecy's share price of $3.70 as at March 1, 2012,
representing a premium of 130 percent to Ursa's closing price as at
March 1, 2012 of $0.065.
Prophecy is also to subscribe for $1 million common shares of Ursa by
way of private placement financing at $0.06 per share, subject to
regulatory approval. Upon placement completion, John Lee and Greg Hall,
current Prophecy directors, will be appointed to Ursa's board.
The acquisition will allow Prophecy to become a mid-tier resource company with a diversified pipeline of Platinum nickel projects, including the fully permitted open-pit Shakespeare Platinum group metals-nickel-copper mine near Sudbury, with near term production capabilities.
The feasibility study by Micon International in January 2006 for
Shakespeare and subsequently updated in 2008, defined a probable reserve
of 11,828,000 tonnes grading 0.33% nickel, 0.35% copper, 0.02% cobalt,
0.33 grams per tonne (g/t) Platinum, 0.36 g/t palladium and 0.18 g/t gold. The mineral reserve is to a maximum depth of 250 metres below surface
In addition, the deal provides Ursa shareholders with liquidity,
sustaining capital and opportunity to participate in exploration and
development upside of Prophecy's Wellgreen and Lynn Lake properties.
The Wellgreen project in the Yukon has over 10 million ounces of Platinum-palladium-gold inferred resource. Active drilling is ongoing with a pending preliminary economic assessment study.
Manitoba's Lynn Lake nickel-copper has over 262 million pounds of
nickel, and 138 million pounds of copper in the measured and indicated
Following the deal’s close, Prophecy plans to publish a new
Shakespeare feasibility and examine project economics and metal prices
prior to making a production decision.
At the appropriate time, joint venture partners may be sought to
develop Wellgreen, Lynn Lake, and Shakespeare, with Wellgreen set to be
“We believe with this production ready mine, Prophecy would raise its
profile, broaden investment appeal, and gain further trading
liquidity,” Prophecy’s chairman John Lee said in a statement.
"Ursa's board recognize the synergy and that this deal is potentially accretive to both Ursa and Prophecy shareholders."
The deal includes a break fee of $1.5 million, which is payable to Prophecy should Ursa accept a superior un-solicited bid.
on 79.7 million Ursa common shares outstanding, Prophecy is expected to
issue 3.19 million shares as part of the transaction.
If required, both companies said they would call a special meeting of
shareholders in late May to vote on the transaction. The deal is slated
to close on June 15.
President and CEO of Ursa, Richard Sutcliffe, added: "We are very
pleased to have reached this agreement with Prophecy which provides an
excellent opportunity to advance the Shakespeare Mine.
"Our shareholders will to participate in a combined company with an
outstanding portfolio of assets and substantially improved market
capitalization and liquidity."
Once the deal is completed, Sutcliffe will be appointed to Prophecy's board.
Earlier in January, Prophecy announced that it would initiate underground drilling at its Wellgreen Platinum group metals (PGM) nickel copper project.
The miner plans to drill about 9,000 metres to target infill areas of
its existing resource, as well as the potential expansion of the
resource to the south, where a pit area is being designed for the
company’s preliminary economic assessment due to finish by the first
quarter of 2012.
The company has received drill permits and has mobilized a crew to
the site to prepare drill stations. Drilling is expected to continue
year-round, covering the one-kilometre strike of the Wellgreen East
In addition, the results from the underground drilling will
potentially upgrade its inferred resource to the measured and indicated
In July 2011, the company reported 289 million tonnes grading 0.38
percent nickel, 0.35 percent copper, and 1.18 grams per tonne (g/t) PGM
plus gold in the inferred category, and 14 million tonnes grading of
0.69 percent nickel, 0.62 percent copper and 2.25 g/t PGM plus gold in
the indicated category.
The company is a Canadian nickel and Platinum
group metals exploration explorer with projects in Canada, Argentina
and Uruguay. In Canada, it holds the Lynn Lake project in Manitoba, as
well as Wellgreen.