AbraPlata Resource Corp. said July 29 that it has agreed to acquire Aethon Minerals Corp. in a proposed transaction that has an estimated value of C$8.8 million, to create an advanced-stage silver-gold exploration company and expand its portfolio of early-stage precious metal and copper exploration properties in Argentina and Chile, including the Diablillos silver-gold property in Argentina's Salta province.
Under the proposed deal, all issued and outstanding shares of Aethon Minerals will be exchanged for 3.75 AbraPlata common shares each. The exchange ratio implies consideration of 24.8 Canadian cents per Aethon share based on the 10-day volume weighted average price.
AbraPlata and Aethon shareholders will own approximately 48% and 52% of the combined entity, respectively, prior to the issuance of additional shares to AbraPlata's largest shareholder SSR Mining Inc., subject to certain key concessions.
Both companies are committed to expedite consummating the proposal, wherein a fee of C$250,000 shall be paid by whichever party will terminate the letter of intent. A definitive agreement is expected on or before Aug. 30.
Should the transaction push through, SSR Mining and Aethon's largest shareholder Altius Minerals Corp. will nominate one director each.
AbraPlata noted that there is a strong potential for high-grade gold mining in Diablillos, which remains largely untested up-to-date, citing that it wants to conduct a comprehensive drilling program and if warranted, prepare an underground preliminary economic assessment due to Aethon's cash position at C$3.7 million as of March 31, 2019.
SSR Mining has expressed support for the proposal, and subject to its completion, has agreed to defer the outstanding Diablillos property payments of US$5 million and US$7 million for four years and waive all outstanding advance royalty payments in exchange for considerations to be identified.
In March, Aethon has secured an option on AbraPlata's Diablillos project, wherein an amount of US$50,000 must be paid for a stake of at least 50%.