Brumby soars on merger deal
UPDATE 2.20pm: Shares in Brumby Resources soared after the company announced an $8.8 million merger with privately-owned zinc explorer Marindi Metals.
Under the terms of the $2.5 million deal, the vendors of Marindi will receive 250 million one-cent Brumby shares and 25 million options as well as a package of unlisted performance-based options.
Marindi’s executives Joe Treacy, Ross Ashton and Jeremy Robinson will join Brumby’s board, with Mr Ashton and Mr Treacy becoming chairman-elect and managing director respectively and Mr Robinson becoming company secretary and corporate manager.
Brumby’s chairman Geoff Jones will step down as chair at the end of January next year following a transition period but will remain on the board as a non-executive director together with John Hutton.
Tom Henderson and Drew Totterdell will step down from Brumby's board.
Brumby said it would also seek to raise $3.75 million by way of a $1.25 million placement and a $2.5 million rights issue.
Brumby said the raising would ensure the merged entity was well placed to pursue an exploration and development program at Marindi’s flagship asset, the Newman base metals project, 60km south-west of Newman.
The project hosts an indicated and inferred resource of 3mt grading at 5 per cent zinc, 1.6 per cent lead and 15 grams per tonne gold, focused on the Prairie deposit. The project also comprises the nearby Wolf lead-zinc-silver prospect and other prospective targets.
Brumby chairman Geoff Jones said the merger deal would reposition Brumby at the forefront of the Australian zinc industry.
“Marindi has assembled an exceptional zinc and base metal portfolio in the Newman base metal project, which offers a unique combination of existing resources with growth potential at the Prairie deposit, an emerging large-scale discovery at the Wolf prospect and district-scale exploration potential for world-class base metal deposits,” he said.
“Zinc has one of the most favourable market outlooks of any commodity over the next five years.
“The Newman base metals project is ideally positioned to develop a very large base metal resource portfolio over the next one-to-two years and establish the foundation for a significant zinc producer in the medium term.”
Marindi’s chairman Ross Ashton said the new entity would embark on an extensive exploration and development program.
“We look forward to completing this transaction and moving ahead with exploration activities at the Newman base metals project in the third quarter of this year,” he said.
Brumby shareholders are expected to vote on the deal and capital raising at a meeting on Monday, July 6.
Shares in Brumby were up 0.6 cents, or 66.67 per cent, to 1.5 cents at the close.
