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Mercator Minerals and Intergeo Combine to Create a New Copper-Focused Base Metals Company

TORONTO, ONTARIO -- (Marketwired) -- 12/12/13 -- Mercator Minerals Ltd. (TSX: ML) and Intergeo MMC Ltd -


--  Combination of Mercator and Intergeo to create a new copper-focused base
    metal company with a robust growth profile and strong financial backing
--  US$100 million investment by Intergeo's controlling shareholder provides
    ample liquidity to realize the near-term potential of the combined
    portfolio
--  Addition of the world-class Ak-Sug copper development project
    complements Mercator's existing producing and development assets
--  Mercator's Board of Directors unanimously supports the transaction and
    recommends that shareholders vote in favour of the transaction

Mercator Minerals Ltd. ("Mercator") and Intergeo MMC Ltd ("Intergeo") are pleased to announce that they have entered into an arrangement agreement (the "Arrangement Agreement") and ancillary documentation to effect a business combination by way of plan of arrangement (the "Arrangement") to create a new copper-focused base metals company with a robust growth profile and strong financial backing (the "Transaction").

The combined assets will include an attractive portfolio of producing and short and medium-term development properties. Mercator's Mineral Park Mine will receive a substantial cash injection to stabilize and improve its operations. Mineral Park Inc. ("MPI"), the wholly-owned subsidiary of Mercator which holds the Mineral Park Mine, is expected to become cash flow positive and able to service its outstanding debt obligations at current spot commodity prices. Mercator's El Pilar project represents an attractive near-term development asset to be advanced in a financially responsible manner and is expected to provide an attractive return on investment at current commodity prices.

In the medium-term, Intergeo's world-class Ak-Sug copper project provides a compelling growth opportunity, with a geologic profile similar to other recent high-profile discoveries and operating assets in central Asia. Ak-Sug is favourably positioned in southern Siberia in close proximity to China, the world's largest copper consumer. In addition, Intergeo has other development and exploration opportunities that will continue to be evaluated and could be advanced if the expected financial return is attractive.

Bruce McLeod, President and CEO of Mercator, stated: "We are very pleased to be announcing this transaction today. It is the result of a comprehensive process undertaken to evaluate the strategic alternatives available to the company and we believe it represents the most compelling opportunity for Mercator."

John Lill, CEO of Intergeo, stated: "The entire Intergeo organization and its owners are very excited by the potential of a combination with Mercator. We believe there are tremendous opportunities to create value based on a well-funded business plan for Mineral Park and the combined portfolio of world-class development properties in El Pilar and Ak-Sug. We intend to focus our efforts initially on optimizing Mineral Park, bringing El Pilar to production and then developing Ak-Sug in a financially disciplined manner. We have assembled a highly experienced management team and board of directors to execute our vision."

Transaction Overview

In connection with the Transaction, Daselina Investments Ltd. ("Daselina"), Intergeo's controlling shareholder, has agreed to invest US$100 million (which includes up to US$14 million to be advanced under the bridge loan described below) plus an amount equal to the accrued interest under the bridge loan via a private placement (the "Private Placement") in the combined company at a subscription price of US$0.1224 per share (approximately C$0.13 per share) (the "Subscription Price"). Prior to completing the Transaction, Daselina has agreed to advance up to US$14 million (which will comprise a portion of the aggregate subscription price for the Private Placement) to MPI by way of a bridge loan (as set out below) to provide it with sufficient funding to stabilize its operations until the Transaction is completed. Approximately US$50 million (which includes up to US$14 million to be advanced under the bridge loan) of the proceeds from the Private Placement will be advanced to MPI in connection with the Transaction to fund principal payments under MPI's existing credit facility (as set out below), trade payables, and deferred maintenance and capital expenditures. The remainder of the proceeds from the Private Placement will be used to fund closing costs related to the Transaction, to advance the El Pilar and Ak-Sug projects and for general working capital.

Intergeo's shareholders, Daselina and Kirkland Intertrade Corp. ("Kirkland"), will receive approximately 8.35 common shares of the combined company for each Intergeo share. As well, each of Daselina and Kirkland will also receive one newly-created non-transferable, non-voting, non-participating special share in the combined company which provide certain special rights and restrictions as set out in the Arrangement Agreement, which include the right to nominate up to three directors in certain circumstances and to appoint the Chair and CEO. Mercator shareholders will receive one new common share of the combined company plus one transferable put right for each existing Mercator common share. Each put right will entitle the holder thereof to sell one common share of the combined company to the combined company at a price of C$0.10. The put rights will be exercisable during the period of 18 to 30 months from the date of issuance and will expire thereafter. The put rights will be governed by an indenture pursuant to which, among other things, Daselina or its designee will deposit cash or an irrevocable letter of credit in the amount of approximately C$31.7 million with a trustee to be available to support the combined company's payment obligation in relation to the put rights.

Upon completion of the Transaction, the combined company will be renamed "Intergeo Mining Ltd." As part of the Transaction, the common shares of the combined company will be consolidated on a 1 for 50 basis. The information described herein is on a pre-consolidation basis. Existing Intergeo shareholders will own approximately 85% and existing Mercator shareholders will own approximately 15% of the outstanding shares of the combined company.

Benefits of the Transaction

The combined company will provide the following key benefits for its shareholders:


--  strong balance sheet and ample liquidity to realize the growth potential
    of the combined asset portfolio
--  geographic diversification with assets in mining-friendly jurisdictions
    in the U.S., Mexico and Russia
--  complementary asset mix with producing and attractive short and medium-
    term development properties, including Mercator's El Pilar project and
    Intergeo's world class Ak-Sug copper project
--  experienced and highly accomplished management team and board of
    directors with deep and relevant knowledge of the mining industry
--  committed financial partner in Intergeo's controlling shareholder,
    Daselina, a part of ONEXIM Group which has an excellent track record in
    the mining sector
--  compelling re-rating opportunity based on an attractive market
    valuation, a strong combined asset portfolio, complementary management
    capabilities and an improved financial position

Leadership Team and Board

John Lill will lead the combined management team as CEO and will bring together the management skill, experience and depth of both organizations. The combined company will benefit from a highly-accomplished and knowledgeable board comprised of eight Intergeo nominees and one continuing Mercator director.

Board of Directors:


--  Maxim Finskiy, Executive Chairman - Served as the Executive Chairman and
    director of White Tiger Gold Ltd. and Deputy General Director and Deputy
    Chairman of Norilsk Nickel
--  John Lill, CEO and Director - Current President & CEO of Intergeo, and
    served as the CEO of FNX Mining, COO of BHP Billiton Base Metals,
    Executive VP of Dynatec Corporation, VP Operations of Rio Algom Limited
    and Senior VP U.S. Operations at Barrick Gold Corporation.
--  John Bowles, Director - Current Director of Mercator and Hecla Mining
    and was previously a Partner at PriceWaterhouseCoopers LLP; also served
    as Director of HudBay Minerals Inc. and Director of Boss Power Corp.
--  Christophe Charlier - Deputy CEO of ONEXIM Group and currently serves as
    Chairman of Renaissance Credit, Vice Chairman of Renaissance Capital,
    and Director of UC Rusal, Quadra - Power Generation, and RBC Holding.
    Former Director for Strategic Development and M&A at Norilsk Nickel and
    Director of Ecometals Limited.
--  Richard Evans, Director - Current Chairman of Constellium and Director
    of CGI and Noranda Aluminum, and served as Chairman of Resolute Forest
    Products (formerly Abitibi Bowater), the CEO of Alcan Inc., Executive
    Director of Rio Tinto PLC and Chairman of the International Aluminum
    Institute
--  Patrick Garver, Director - Former Executive VP and General Counsel at
    Barrick Gold Corporation
--  Walter Murray, Director - Current Director of Hydro One Inc., and former
    Vice-Chairman of the Executive Committee of RBC Capital Markets and
    Director of Ivernia Inc.
--  Dmitry Razumov, Director - CEO of ONEXIM Group since its foundation in
    2007 and Director of Intergeo since 2008, currently serves as Chairman
    of Renaissance Capital, Open Investments and Soglasie Insurance,
    previously served as Director of Norilsk Nickel, Polyus Gold and UC
    RusAl, and was the Deputy CEO for Strategy and M&A at Norilsk Nickel.
--  Mike Salamon, Director - Current Director of Central Rand Gold Ltd., Gem
    Diamonds Limited, Ferrexpo PLC and Minera Las Cenizas, and served as the
    Executive Director of BHP Billiton

Bridge Loan

MPI has entered into a bridge loan credit agreement pursuant to which Daselina will advance up to US$14 million to MPI to provide it with sufficient funding to stabilize its operations until the Transaction is completed. The initial commitment under the bridge loan will be US$10 million and will be available upon satisfaction or waiver of certain conditions precedent. The initial commitment will increase to US$12 million on March 1, 2014 and US$14 million on April 1, 2014 if the Transaction has not yet been completed by these dates. The bridge loan will mature and be payable in the event the Transaction is not completed. It will accrue interest at a rate of 15% per annum.

At the closing of the Transaction, Daselina will assign the principal and interest thereon of the bridge loan to Mercator, as partial payment of the aggregate subscription price under the Private Placement.

As partial consideration for the bridge loan, Mercator will, subject to the approval of the TSX, issue to Daselina 50,962,676 share purchase warrants representing 13.9% of the outstanding Mercator common shares on a partially diluted basis (assuming the exercise in full of such warrants), which warrants may only be exercised if the Transaction is not completed and will be cancelled upon the completion of the Transaction. Each such warrant will entitle the holder thereof to purchase one Mercator common share at the Subscription Price for a period of five years following the date of issuance. Initially, Daselina will advance up to US$10 million to MPI under the bridge loan, upon which 34,685,741 warrants representing 9.9% of the outstanding Mercator common shares on a partially diluted basis (assuming the exercise in full of such warrants) will become exercisable (if the Arrangement Agreement is terminated). If and when the commitment under the bridge loan is increased to US$12 million, an additional 7,953,712 warrants will become exercisable (if the Arrangement Agreement is terminated) such that, in aggregate, Daselina would hold warrants representing 11.9% of the outstanding Mercator common shares on a partially diluted basis (assuming the exercise in full of such warrants). If and when the commitment under the bridge loan is increased to US$14 million, the remaining 8,323,223 warrants will become exercisable (if the Arrangement Agreement is terminated) such that, in aggregate, Daselina would hold warrants representing 13.9% of the outstanding Mercator common shares on a partially diluted basis (assuming the exercise in full of all warrants).

Amended & Restated Credit Facility

MPI has entered into an amended and restated credit agreement with the lenders under the MPI credit facility which will become effective upon the completion of the Transaction. Pursuant to the amended and restated credit agreement, US$86.8 million will be outstanding in the form of a term loan. MPI has agreed to make principal payments on the term loan at the time of closing equal to (i) US$9.5 million, and (ii) the greater of the funds remaining in the debt service reserve account and US$3 million. The remaining principal outstanding under the term loan will be repaid over a fixed amortization schedule of 13 quarters, subject to certain quarterly prepayments if MPI realizes a molybdenum price greater than US$12.00 per pound, both of which will commence in December 2014. Pursuant to the amended and restated credit agreement, the MPI lenders have agreed to eliminate certain financial and reporting covenants, as well as the debt service and maintenance reserve accounts, which currently exist under the MPI credit facility. Under the amended and restated credit agreement, the LIBOR interest margin under the term loan will be 4.50% and the term loan will be subject to a minimum LIBOR rate of 1.00%. The existing security package will remain in place but Mercator's parent guarantee will be discharged upon completion of the Transaction. The lenders under the MPI credit facility have agreed to waive certain fees payable under past amendments to the MPI credit facility and to compromise certain amounts owing under past interest rate swaps and copper hedges. In addition, the amended and restated credit agreement establishes a termination claim facility to deal with the termination liability created by the close out of certain copper hedge positions by the MPI lenders. The outstanding balance of up to US$19.9 million under the termination claim facility entered into by MPI and the MPI lenders will depend on the weighted average strike price of certain replacement copper hedge positions. The outstanding balance under the termination claim facility will be amortized over 30 months from the proceeds of the replacement copper hedge positions entered into by MPI and the MPI lenders. Interest will not be payable under the termination claim facility.

The MPI lenders have agreed to waive certain existing events of default and compliance with certain restrictive covenants under the MPI credit facility until the earlier of (i) the date upon which the Transaction is consummated, and (ii) the date upon which the Arrangement Agreement is terminated.

The Arrangement

The Transaction will be carried out by way of a plan of arrangement, the implementation of which will be subject to the approval of at least 66 2/3% of the votes cast at a special meeting of Mercator shareholders that is expected to be held in March 2014 followed by and subject to the approval of the Supreme Court of British Columbia. The Transaction is also subject to applicable regulatory approvals (including the approval of the TSX), certain third party consents and other customary conditions. The Arrangement Agreement also provides for, among other things, customary board support and non-solicitation covenants from Mercator (subject to customary "fiduciary out" provisions that entitle Mercator to consider and accept a superior proposal and a five business day "right to match" in favour of Intergeo). The Arrangement Agreement also provides for the payment of a termination fee of US$6 million to Intergeo if the Transaction is terminated in certain specified circumstances.

None of the securities to be issued pursuant to the Arrangement have been or will be registered under the United State Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and any securities issued pursuant to the Arrangement are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

The terms and conditions for the Transaction will be summarized in Mercator's management information circular, which is expected to be filed and mailed to shareholders of Mercator in February 2014 and will be available on the SEDAR website at www.sedar.com. It is anticipated that the Transaction will be completed in Q2 2014.

Copies of the Arrangement Agreement, Mercator's management information circular and certain related documents will be filed with Canadian securities regulators and will be available on the SEDAR website at www.sedar.com.

Mercator Board of Directors Recommendation

The board of directors of Mercator, after receiving the recommendation of its special committee and consultation with its financial and legal advisors, has unanimously determined that the Transaction is in the best interests of Mercator, that it is fair to Mercator shareholders, and to recommend that Mercator shareholders vote in favour of it. BMO Capital Markets, financial advisor to Mercator, has provided an opinion to the effect that the consideration to be received by Mercator shareholders is fair, from a financial point of view, to Mercator shareholders. All of the directors and senior officers of Mercator have entered into customary voting support agreements pursuant to which, among other things, they have agreed to vote their Mercator common shares in favour of the Transaction.

Advisors and Counsel

BMO Capital Markets is acting as financial advisor to Mercator. DuMoulin Black LLP and Blake, Cassels & Graydon LLP are acting as legal counsel to Mercator. Stikeman Elliott LLP is acting as legal counsel to the special committee of the board of directors of Mercator.

Morgan Stanley & Co. LLC is acting as financial advisor to Intergeo. Norton Rose Fulbright is acting as legal counsel to Intergeo.

Renaissance Capital is acting as financial advisor to Daselina.

Conference Call

Mercator and Intergeo's senior management will hold a conference call and a live webcast on December 12, 2013 at 8:00 a.m. Pacific time to discuss the Transaction. To participate in the call, dial 888-789-9572 (North America) and 800-8989-6336 (International) with a conference pass code 4398840#. To listen to the live webcast, visit http://www.gowebcasting.com/4956. A presentation will accompany the call and will be available on the Mercator's website.

A replay of the conference call will be available for playback after the event until December 26, 2013 by dialling 1-800-408-3053 (North America), 800-3366-3052 (International) with conference pass code 8395555#.

About Mercator

Mercator Minerals Ltd., a TSX listed base metals mining company, operates the wholly-owned copper/molybdenum/silver Mineral Park Mine in Arizona, USA. Mercator also wholly-owns two development projects in Sonora, Mexico: the copper heap leach El Pilar project and the molybdenum/copper El Creston property.

About Intergeo

Intergeo is a diversified mineral resource company primarily focused on developing, exploring and acquiring base metal properties in Russia. The Company is 99% owned by Daselina, a part of ONEXIM Group, which has a strong record of success in some of the world's largest metals and mining companies, including Norilsk Nickel and Polyus Gold. Kirkland Intertrade, owned by Maxim Finskiy, holds the remaining 1%. Since 2007, Intergeo has invested over US$200 million in its portfolio of properties. Its key, open pit development project is the Ak-Sug copper porphyry deposit located in southern Siberia.

Disclaimer

Forward-Looking Information

This press release contains certain forward-looking information within the meaning of Canadian securities legislation and forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or future performance and reflect the expectations or believes regarding future events of management of Mercator and Intergeo (the "Companies"). When used in this document, the words "anticipates", "may", "can", "believes", "expects", "projects", "intends", "likely", "will", "to be" or the negative of these terms and any similar expressions and any other statements that are not historical facts, in each case as they relate to Mercator, Intergeo or the combined company are intended to identify those assertions as forward-looking information and statements. In making such statements, the person making them believes that its expectations are based on reasonable assumptions. However, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected or anticipated. This information and these statements, referred to herein as "forward-looking statements", are not historical facts, are made as of the date of this press release and include without limitation, statements regarding discussions of future plans, guidance, projections, objectives, estimates and forecasts and statements as to management's expectations with respect to, among other things, the successful completion of the Transaction, the ability to meet obligations under the MPI credit facility and other debt instruments and the receipt of any and all necessary regulatory approvals, third party consents and authorizations may constitute forward looking statements.

These forward-looking statements involve numerous risks and uncertainties and actual results may vary. Important factors that may cause actual results to vary include without limitation, certain transactions, the successful completion of the Transaction, and the ability to meet obligations under the credit facilities and other debt instruments, the timing and receipt of certain approvals, changes in commodity and power prices, changes in interest and currency exchange rates, risks inherent in exploration results, timing and success, inaccurate geological and metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications, cost escalation, unavailability of materials, equipment and third-party contractors, delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), political risk, social unrest, and changes in general economic conditions or conditions in the financial markets. In making the forward-looking statements in this press release, the Companies have applied several material assumptions, including without limitation, the assumptions that: (1) the receipt of necessary consents and approvals and satisfaction of all conditions precedent for the completion of the Transaction (and for draw downs of funds under the bridge loan) in a timely manner; (2) market fundamentals will result in sustained copper, molybdenum and nickel demand and prices; (3) the current copper leach operations at Mineral Park remain viable, operationally and economically; (4) the milling operations at Mineral Park will continue to be viable, operationally and economically; (5) the receipt of any necessary approvals and consents in connection with the development of any new properties; (6) the availability of financing on suitable terms for the development, construction and continued operation of any mineral properties; and (7) sustained commodity prices such that any properties in or put into operation remain economically viable.

Information concerning mineral reserve and mineral resource estimates also may be considered forward-looking statements, as such information constitutes a prediction of what mineralization might be found to be present if and when a project is actually developed. Certain of the risks and assumptions are described in more detail in the Mercator's Annual Information Form, audited financial statements and MD&A for the year ended December 31, 2012 and the quarter ended September 30, 2013 on the SEDAR website at www.sedar.com. The actual results or performance by Mercator and Intergeo, could differ materially from those expressed in, or implied by, any forward-looking statements relating to those matters. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on the results of operations or financial condition of Mercator or Intergeo. Except as required by law, we are under no obligation, and expressly disclaim any obligation, to update, alter or otherwise revise any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Contacts:
Mercator Minerals Ltd.
D. Bruce McLeod, P.Eng.
President & CEO
778-330-1290
bmcleod@mercatorminerals.com

Mercator Minerals Ltd.
David Jan, CA
Head of Investor Relations
778-330-1295
djan@mercatorminerals.com

Intergeo MMC Ltd
John Lill
CEO
416-637-1517
lill@intergeommc.com

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