Roxmark Mines Ltd (TSXV-RMK) said Friday it plans to amalgamate with Ontex Resources Ltd. (TSX:ONT) in an all-stock transaction to form a new company that will eventually be called Goldstone Resources Ltd.
The two companies have scheduled special meetings of shareholders for Dec. 18 to consider the proposed merger, in which Ontex will acquire all Roxmark shares in a "three-cornered" amalgamation which will result in Roxmark becoming a wholly-owned subsidiary of Ontex.
Ontex shareholders will also be asked to approve the change of the company's name to Goldstone Resources on completion of the transaction.
Under the deal, Roxmark shareholders will be entitled to receive one Ontex share for every 1.25 Roxmark shares held at the time of completion of the transaction.
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Prior to completing the transaction, Ontex plans to consolidate its outstanding shares on a 1-for-3 basis. If completed prior to the merger, Ontex will issue one share for every 3.75 shares of Roxmark.
In addition, all convertible securities of Roxmark will be exercisable for shares of Ontex based on the same exchange ratio applicable to the Roxmark shares.
"Roxmark and Ontex believe the land position of the combined company will improve exploration potential and offer significant synergies in exploration, development and diversification of risk," Roxmark said in a news release.
It added that existing mine infrastructure, which includes a permitted mill, will also be "a significant advantage."
Closing is anticipated on or before the end of 2009, at which point Roxmark shareholders will hold approximately 56 per cent of the combined company on a non-diluted basis. There will be approximately 97.2 million shares outstanding on a post consolidation basis.
Ontex is a junior resource company focused on gold exploration and deposit delineation at its Brookbank gold property in northern Ontario.
Roxmark is a gold and molybdenum exploration and development company operating in the Geraldton-Beardmore area of Ontario.
Ontex shares were down 1.5 cents at 30 cents Friday on the Toronto Stock Exchange, while Roxmark shares were unchanged at 20.5 cents on the TSX Venture Exchange.