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Thursday, 11 July 2013
Forte Energy to merge with major Mkango Resources shareholder
Forte Energy (LON:FTE) (ASX:FTE) has unveiled a plan to acquire additional rare earth and uranium interests in Africa.
In an all-paper deal Forte will merge with Leo Mining & Exploration (Leominex), a vehicle that owns a 48% stake in Toronto-listed Mkango Resources (CVE:MKA).
This effectively gives the firm an interest in Mkango’s wholly-owned Songwe Hill rare earth deposit in Malawi, which is advancing through a pre-feasibility study and has an indicated resource of 13.2mt grading 1.62% total rare earths (TREO), with 18.6mt at 1.38% in the inferred category.
Leominex, which is 17% owned by Mkango chief executive William Dawes, also has an 8% stake in Signet Mining Services with interests in uranium projects in Niger and Chad.
This adds to Forte’s current assets in Mauritania and Guinea, which have defined uranium resources as well as rare earth potential.
Through the deal, Forte will issue new shares - equating to 95% of its currently issued shares (about 860mln shares) - to the shareholders of Leominex.
The proposal will have to be approved by shareholders of Forte, Leominex and Mkango. Forte says the proposal already has the backing of the significant shareholders in each company.
Forte believes the enlarged group’s market capitalisation and enhanced asset base will put it in a position to execute its strategic growth plans, which may include additional acquisitions.
"The proposed transaction to acquire Leominex would create an African focussed uranium and rare earth explorer and developer with an enhanced portfolio of project interests and the technical expertise and financial strength to advance its assets towards production,” said Forte Energy managing director Mark Reilly.
“In addition, the combined business will benefit from deeper technical expertise and a board with experience in developing and building numerous projects."