CancanaResources Corp. said July 21 that it has signed a nonbinding letterof intent to merge with Ferrometals Holdings Cooperatief UA.

Under the terms, Ferrometals will acquire all the shares ofCancana in exchange for its own shares and assume the latter's listing on theTSX Venture Exchange.

The companies are joint ventures partners in , and theproposed transaction seeks to combine and streamline the ownership structure ofBMC.

According to the statement, the transaction is subject toboard and shareholder approval, a formal agreement, customary due diligence andapproval of the TSX Venture Exchange, Canadian Securities Exchange and all otherconcerned regulatory bodies.

Cancana expects to finalize the deal in October.

Ferrometals has so far contributed approximately US$27.6million to the joint venture, while Cancana has contributed US$7.5 million.Based on these figures, Ferrometals owns approximately 78.6% and Cancana ownsthe remaining 21.4% of BMC.