Queenstake brings to the table properties in Peru, Chile and Mexico plus $8 million in cash.
In Peru, the company holds 130,000 ha, including the Ancash joint venture with
Santa Cruz’s major assets include the Magistral gold property in Mexico’s Sinaloa state. In the next few months, the company will begin a feasibility study to determine the resource at Magistral, where annual production is currently projected at 35,000 oz. at a cash cost of US$175 per oz.
Santa Cruz also owns the suspended Lluvia de Oro gold mine in Mexico’s Sonora state, as well as the 50-sq.-km Ceibo gold project in Belize.
The new company is expected to retain the name Queenstake. James Mancuso, currently president of Queenstake, will become chairman, whereas Chris Davie, president of Santa Cruz, will become president and chief executive officer.
Each Santa Cruz share will be converted into 0.11 share of the new company, with each Queenstake share converted into half a share. The merged company will have 30 million shares outstanding, with Queenstake shareholders controlling 65% of the company.
The board of directors will consist of four members nominated by Queenstake and three by Santa Cruz. The merger is subject to due diligence reviews over the next 30 days. Santa Cruz must also complete its December 1998 business combination with Castle Exploration. The deal is expected to be approved by shareholers and regulators within the next 90 days.
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