Mamba Minerals Ltd (ASX:MAB, “Mamba”) is pleased to advise that it has entered into a definitive arrangement agreement (“Arrangement”) to effect a merger of Mamba and Canadian iron ore developer Champion Iron Mines Ltd TSX:CHM, “Champion”). Under the terms of the Arrangement, Champion shareholders will receive 11 Mamba shares for every 15 shares they hold.
The merger once completed will create a new iron ore company to be named “Champion Iron Limited” having a significant holding in one the world’s leading iron ore regions and a team of management and directors with a track record for attracting strategic investment into major resource projects. The merged company will remain listed on the Australian Securities Exchange (“ASX”).
The experience of Mamba’s board in the development and funding of large tonnage mining and infrastructure projects fits with the advancing stage of development of Champion’s major asset, the Consolidated Fire Lake North Project ("Fire Lake"). Champion has 100% direct ownership of the highly prospective Fire Lake which completed a Prefeasibility Study (“PFS”) in February 2013 for production of 9.3Mtpa, with a Net Present Value of C$3.3b with operating costs of C$44/t1.
Mamba Chairman Michael O’Keeffe will transition to Executive Chairman of the merged company with an immediate term mandate to progress the development of Fire Lake. Thomas Larsen the current Chairman and CEO of Champion will become the CEO of Mamba.
The merged company will commence work immediately on upgrading the 2013 PFS to a bankable feasibility study (“BFS”) which is expected to take 12 months to complete. To accelerate this initiative, Mamba will raise $10m via a private placement to selected strategic and other investors effective at the completion of the merger. Funds raised will be used to assist the company to complete a BFS on the Fire Lake project (including additional infill drilling and working capital).
For existing commitments, Mamba has negotiated a two year extension to the Snelgrove Option agreement to September 2017 (conditional on completion of the Arrangement within 6 months), allowing it more flexibility on its development time table and the ability to focus on Fire Lake in the near term.
Mamba Chairman Michael O’Keeffe said: “The merger is an exciting prospect for shareholders of both companies. We believe there is significant potential to commence production at Champion’s main project Fire Lake over the next few years. Under the new board and with the joint resources now available, Mamba is in an excellent position to deliver this”.
“Significantly, the region is already developed to service major producers in terms of rail and port infrastructure. Fire Lake is adjacent to an ArcelorMittal operating mine producing around 1.6Mtpa and within 70km of 45Mtpa of production from IOC/RIO, Cliffs and ArcelorMittal.
Strategically, Fire Lake location is well positioned for an emerging iron ore company,” Mr O’Keeffe said.
MAB Price at posting:
55.0¢ Sentiment: None Disclosure: Not Held
