Discovery Metals Corp. agreed to acquire Levon Resources Ltd. to form a silver-focused explorer in Mexico.
A Discovery unit intends to acquire Levon through a share exchange of 0.55 of a Discovery share for each Levon share held. The exchange ratio is based on Discovery's closing price of 23 Canadian cents per share on the TSX Venture Exchange on May 29.
Levon will become a wholly owned subsidiary of Discovery upon closing. Former shareholders of Levon and Discovery will hold 49.6% and 50.4%, respectively, of the combined entity.
Levon said May 30 that the transaction will provide the necessary expertise and finances to accelerate the development of its Cordero silver project in Chihuahua, Mexico.
Discovery owns the Puerto Rico, Minerva and Monclova silver-zinc-lead projects in Coahuila, Mexico, as well as several other early-stage showings and prospects in the country.
The boards of both companies unanimously approved the proposed deal, while directors, officers and certain key Levon shareholders owning about 12% of the company also committed to vote in favor of the transaction in a special meeting in July.