ASX Announcement 17 July 2018
Mustang Resources Ltd (ASX: MUS) is pleased to announce that it has entered into a merger agreement for its Montepuez ruby assets with TSXV-listed Fura Gems Inc. (TSXV.FURA) for A$10 million in shares.
Under the agreement, the shares will be issued to Mustang in three tranches over 20 months to give Mustang around an 8% stake in Fura, excluding percentage equity dilution from capital raised from today.
Mustang intends to conduct an in-specie distribution of the Fura shares to Mustang shareholders when they emerge from escrow.
Fura will give Mustang shareholders a significant exposure to the rapidly growing ruby market via a specialist gem company with extensive experience and a diversified asset base in the coloured gemstone industry.
The merger will also enable Mustang to focus solely on its Caula Graphite-Vanadium Project, where it has recently generated a host of high-grade drilling results and exceptional graphite metallurgical results. The transaction does not trigger any Board or senior management changes.
Mustang continues to aim to start production from its pilot plant at Caula in the June quarter of 2019. Mustang will continue to ensure that it has it has the skills, abilities and knowledge required to progress the highly prospective Caula Graphite-Vanadium project.
Mustang Managing Director Dr. Bernard Olivier, said the transaction was aimed at unlocking the value of the Company’s ruby assets while enabling the development of the graphite-vanadium project.
“Both Montepuez and Caula are outstanding assets in their own rights with substantial growth prospects,” Dr Olivier said. “But the reality is that they don’t sit together comfortably in a publicly-listed company, where investors tend to have an interest in one or the other of these very different businesses.
“In simple terms, this merger will benefit Mustang shareholders by giving them ongoing exposure to the ruby assets and Fura’s other ruby and gemstone assets via the shares in Fura.
“At the same time, the ruby assets will be managed by some of the world’s leading gem mining and marketing specialists, whose company has committed to spending A$25 million on their exploration and resource definition workprogramme.
“Fura will also bring the critical mass required to compete with established players in the ruby market. All up, this will maximise the potential to create value for Mustang shareholders.
“The transaction will allow Mustang to focus solely on exploring and developing its Caula graphite and vanadium project, which continues to go from strength to strength on the back of strong drilling and metallurgical results. We are anticipating being able to announce our maiden Vanadium JORC Resource and significantly improved Grapite JORC Resource within the coming days.”
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