Doré Copper Mining Corp. (“Doré Copper”) (TSXV: DCMC; OTCQB: DRCMF; FRA: DCM) is pleased to announce that it has entered into a definitive arrangement agreement (the “Agreement”) on October 14, 2024 with Cygnus Metals Limited (ASX: CY5) (“Cygnus”) to combine their respective businesses in a merger of equals transaction, pursuant to which Cygnus has agreed to acquire 100% of the issued and outstanding common shares of Doré Copper (the “Doré Copper Shares”) by way of a court approved plan of arrangement under the Canada Business Corporation Act (the “Transaction”).
This Transaction will create a Québec-focused critical minerals explorer and developer with high-grade copper and lithium resources. The merger of equals will bring together proven members of management with strong capital markets experience, project development, mine building and operational expertise and a proven track record of mineral discoveries.
Pursuant to the terms of the Agreement, holders of Doré Copper Shares will receive 1.8297 ordinary shares of Cygnus (“Cygnus Shares”) in exchange for each Doré Copper Share (the “Exchange Ratio”) held immediately prior to the effective time of the Transaction (the “Effective Time”). The Exchange Ratio is based on an approximate 5-day volume-weighted average price of Doré Copper Shares on the TSX Venture Exchange (“TSXV”) and Cygnus Shares on the Australian Stock Exchange (“ASX”) as at October 11, 2024. This represents an implied value of C$0.141 per Doré Copper Share and an implied equity value for Doré Copper of C$24 million. As of the date of theAgreement, existing shareholders of Doré Copper (“Doré Copper Shareholders”) and shareholders of Cygnus will own approximately 45% and 55%, respectively, of the outstanding Cygnus Shares following completion of the Transaction (before taking into account the Cygnus Equity Raise (as defined below)). In connection with the Transaction, Cygnus intends to complete an equity raise of Cygnus Shares for aggregate gross proceeds of up to a maximum of A$11 million (with a minimum of A$5 million) (the “Cygnus Equity Raise”). The net proceeds of the Cygnus Equity Raise are expected to be used for, among other things, advancing the Chibougamau project (assuming the Transaction is completed) and Cygnus’ James Bay lithium projects. Pursuant to the Agreement, Cygnus has covenanted to use commercially reasonable best efforts to complete the Cygnus Equity Raise.
Transaction Strategic Rationale
- Diversified Pipeline and Geographical Synergies: The addition of Cygnus’ quality lithium projects in James Bay, Québec, including Pontax, Auclair and Sakami, to Doré Copper’s high-grade copper assets, expands the asset portfolio of the combined company and provides an opportunity to leverage potential geographical synergy between the lithium properties and Doré Copper’s processing facility near Chibougamau.
- Strong Combined Management: The combined company is expected to benefit from the unique combination of Cygnus’ and Doré Copper’s management teams providing for strong capital markets experience and proven exploration success, project development and operational expertise.
- Capital Markets Presence and Financial Strength: As Cygnus intends to apply for and obtain the listing of the Cygnus Shares on the TSXV as a condition to closing, the Transaction represents an opportunity to elevate the global profile and capital markets presence of the combined company with a dual ASX and TSXV listing.
- Supported Transaction: The Transaction is supported by Doré Copper’s largest shareholders and key strategic investors, Ocean Partners Holdings Limited (“Ocean Partners”) and Equinox Partners Investment Management, LLC (“Equinox Partners”), as well as its directors and officers, who have entered into voting support agreements.
Doré Copper President and Chief Executive Officer, Ernest Mast, commented: “The Doré Copper team is looking forward to working with the Cygnus team to create a critical metals company and to maximize the value of our quality assets in Chibougamau. This merger will provide the funding, additional expertise and the strategy to generate superior shareholder returns through brownfields exploration and to implement a profitable hub-and-spoke operation in the Chibougamau mining camp.”
Cygnus Executive Chairman, David Southam, stated: “This merger is an exceptional opportunity to create value for both groups of shareholders. By combining the proven exploration and management skills of the Cygnus team with the high-grade copper resources and immense upside potential at the Chibougamau properties, we have the potential to unlock substantial value. We intend to devise and implement an aggressive exploration program, utilizing highly experienced geologists and the latest technology, with the aim of driving strong resource growth at a time when the world desperately wants more copper from tier-one locations.
Being able to combine our skill sets with a Québec-based team who has experience in building large resource projects with support from the local communities also provides us with those local connections and experience to assist in advancing our lithium projects in a better macro environment.”
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