Cadiscor and Tiomin combine to form new company

The proposed merger of Cadiscor Resources (CAO-V, CADRF-O) and Tiomin Resources (TIO-T) will create a new company that will be well capitalized to become an intermediate gold producer, management at the two companies say.

Under the transaction, existing Tiomin and Cadiscor shareholders will own about 53% and 47% of the new company, respectively.

Tiomin plans to consolidate its 480.8 million shares outstanding (ten-for-one) and then combine with Cadiscor, which has 43.3 million shares outstanding, on a one-for-one basis.

Following the merger, the new company, which will be called Cadiscor, will have a total of 91.4 million shares outstanding.

Tiomin has also agreed to lend Cadiscor C$7.5 million through a debt facility to immediately refurbish its Sleeping Giant mine in northern Quebec and fast-track it into production.

The Sleeping Giant mine is set to be the new company’s flagship project. In a National Instrument 43-101 technical report published in September 2008, Cadiscor said the mine’s current mineral reserves could generate a profit of $16 million in the first 16 months of operation at a gold price of C$850 per oz. and an annual production rate of 52,000 oz. per year. (At press-time gold was trading at about US$942.20 per oz.)

“This strong new company will be well positioned to leverage continued strength in the price of gold in 2009 and we strongly encourage our shareholders to support the transaction,” Robert Jackson, Tiomin’s president and chief executive said in a statement.

If the transaction is approved, the new company would have about $15 million in cash and cash equivalents and annual production of about 50,000 oz. gold per year when the Sleeping Giant mine moves into production in the third quarter of 2009.

Jackson noted that that the new company would have “near-term, profitable gold production, a strong project pipeline, a solid balance sheet and an experienced team of operating managers and directors.”

Michel Bouchard, Cadiscor’s president and chief executive, said that in addition to improving Cadiscor’s financial strength and fast-tracking the Sleeping Giant mine, the business combination would greatly diversify its asset base.

The new company would have a diversified portfolio of copper-gold assets including Cadiscor’s Discovery project and other gold exploration properties in Quebec, as well as a 49% contributing interest in the Pukaqaqa copper-gold deposit in Peru, a 100% interest in the Kwale titanium minerals sands project in southeastern Kenya and a 17.2% interest in Kivu Gold Corp, which owns gold exploration properties in sub-Saharan Africa.

Cadiscor currently trades at about 31¢ with a 52-week trading range of 13¢-79¢ per share, while Tiomin trades at about 3¢ per share. Over the last year Tiomin has traded in a range of 1.5¢-9¢ per share.