September 9 (SeeNews) - Canadian company St Charles Resources said that it signed a binding letter of intent with a view to acquiring Bulgaria-based private mining business Eastern Resources, which owns two gold projects in southern Bulgaria.
The letter of intent stipulates that the two companies must sign a definitive agreement on the proposed all-share transaction by November 30, St Charles Resources said in a statement on Thursday.
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The potential deal will see the listed Canadian company issue 952,380 common shares for each Eastern Resources share held, to a total of some 33.3 million common shares in exchange for 35 shares in the target company.
In connection with the deal, the parties also intend to carry out a concurrent financing in the form of an offering of securities to the tune of 3 million Canadian dollars ($2.3 million/2.28 million euro), according to the statement. The proceeds will go towards financing exploration and other expenses linked to the two gold projects as well as for working capital needs.
Eastern Resources has four shareholders -- Seefin Capital, Balkan Mineral & Discovery, GEOPS-Bolkan Drilling Services and Dundee Resources, a wholly-owned subsidiary of Canadian mining giant Dundee Corporation. It owns in full the Kutel gold project in the Eastern Rhodope mountains and the Kostilkovo gold project, which is close to the border with Greece, in Bulgaria's Haskovo Region.
The Sofia-based company narrowed its net loss to 25,286 Canadian dollars in 2021 from 46,060 Canadian dollars in 2020. In the first half of 2022, Eastern Resources swung to a net profit of 48,453 Canadian dollars.
The proposed acquisition is subject to a number of conditions, including the completion of technical reports for the two gold projects, due diligence checks as well as regulatory and shareholder approvals.
The two companies aim to complete the deal by the indicative date of February 28, 2023.
St Charles Resources is a special purpose vehicle, or capital pool company, which has no commercial operations and no assets other than cash. Its aim is to identify and evaluate businesses or assets for acquisition.
(1 Canadian dollar = $0.7697/0.7617 euro)