DIAMOND PAGE — Juniors nix merger

A recent decision handed down by the British Columbia Securities Commission has prompted Peruvian Gold (PVO-V) and Gabriel Resources (GBU-V) to scrap their planned merger.

The Securities Commission ruled that Peruvian’s bid for the common shares of Gabriel represents a reverse takeover, and thus would require Peruvian to convene a shareholder meeting to seek approval.

Peruvian announced that it could not obtain shareholder approval within the time limit set up by Gabriel. As a result, the transaction was terminated by mutual agreement. The $1-million breakup fee was not charged to either company because neither had failed to perform its respective obligations according to the terms of the agreement.

Gabriel states that its current financial circumstances make an appeal imprudent at this time, and it intends to pursue other corporate opportunities.

Both companies felt that costs associated with the preparation of material and documentation for a shareholder meeting of Peruvian would snowball, considering that it could take up to 120 days to convene the meeting.

The companies had hoped for a merger of Peruvian’s financial resources and Gabriel’s resource properties in Romania and Bulgaria. Gabriel’s most attractive asset is the Rosia Montana gold project which holds an inferred resource of 48 million tonnes grading 1.7 grams gold, or 2.6 million contained ounces.

Bradstone Equity Partners, which controls 18.4% of Peruvian, released a statement asserting that Peruvian had a legal and ethical obligation to allow its shareholders the right to vote on the merger transaction.

Bradstone asked the Vancouver Stock Exchange to require Peruvian to seek approval.

On April 14, the B.C. Securities Commission overturned its original ruling, which had stated that Peruvian’s bid did not constitute a reverse takeover.