Avocet Resources plans to merge with Lion One Metals with the execution of a deal at a substantial premium,that values Avocet at AUD 7.6 million.
Significantly,the merged entity will have a market capitalization of CAD 35 million and cash in hand of around CAD 18 million.
The two companies have entered into a merger implementation agreement under which Lion One is offering one share for every 9.5 Avocet shares held.
Based on the closing price of Lion One shares on 19th December 2012,the merger implies an offer price of AUD 0.0721 per Avocet share,representing a premium of 28.73%to the closing price of shares on 20th December 2012.
It also represents a premium of 28.07%to the 60 day volume weighted average price of Avocet shares for the period ending 20th December 2012.
On completion of the scheme of arrangement,Avocet shareholders and Lion One shareholders will hold around 18.5%and 81.5%,respectively,of the issued common shares of the merged entity.
The merged entity will have a strong portfolio of precious and base metal and uranium projects in Australia,Fiji,and Argentina,including Lion One's advanced exploration gold project located on the Fijian Island of Viti Levu.
The Tuvatu Gold Project in Fiji hosts an Indicated Resource of 172,000 ounces of gold at an average grade of 7.05 grams per tonne and an Inferred Resource of 480,000 ounces of gold at an average grade of 5.71 gram per tonne.
Recently,completed and ongoing surface,underground and diamond drill programs have been focused on the expansion of this resource.
