North Vancouver-based Mercator Minerals Ltd. (TSX: ML) has entered a definitive agreement to acquire Creston Moly Corp. (TSX-V: CMS), the companies announced this morning.
The deal values Creston at approximately $195 million and will give Creston shareholders 0.15 of a common share of Mercator and $0.08 in cash for each common share.
Marc LeBlanc, Mercator’s vice-president, corporate development, and corporate secretary said his company’s motivation for buying Creston hinges on synergies the companies have in their projects in Mexico, where Creston has its El Creston moly-copper project and where Mercator is developing its El Pilar project.
“The synergies effectively are the ability to build a similar plant to what we have in Arizona on the El Creston property in Mexico and move us to the next level of moly production,” he said.
According to a Mercator news release, Creston’s recently completed preliminary economic assessment on the El Creston project indicated robust economics, based on a molybdenum and copper price of US$15.00 per pound and US $2.60 per pound respectively.
The project is expected to generate average annual production of approximately 24 million pounds of molybdenum and approximately 16 million pounds of copper over a 13-year mine life.
At press time, Mercator’s stock was down nearly 9% since yesterday’s close to $3.37; Creston’s stock was up nearly 22% to $0.056.