Elgin, Jonpol shareholders vote for merger

Shareholder votes at Elgin Resources (ELR-T) and Jonpol Explorations (JON-T) have approved a proposed merger between the two companies.

The merger deal, which would create a new company to be named Eastern Platinum, takes up one share of Elgin or four shares of Jonpol in exchange for one share in the new company. The two are merging to take over a South African company, Eastern Platinum Holdings, which in turn owns a 74% interest in another South African company, Spitzkop Platinum. The remaining 26% of Spitzkop Platinum is held by Afriminerals Holdings, a black-empowerment enterprise in South Africa.

Spitzkop Platinum’s principal asset is a 100% interest in the Spitzkop platinum project on the eastern limb of the Bushveld intrusive complex in Mpumalanga province, South Africa. Elgin already has an equal joint venture agreement with Spitzkop covering the project.

Spitzkop Platinum acquired the property from Impala Platinum Holdings; Elgin will be paying the R16 million ($3.1 million) initial fee owed to Implats and will fund a feasibility study on the project for R30 million ($5.9 million).

A resource calculation on Spitzkop puts the measured resource on the UG2 platinum reef at 37.5 million tonnes grading 3.49 grams platinum, 2.20 grams palladium, 0.65 gram rhodium, 1.03 grams ruthenium, 0.25 gram iridium and 0.08 gram gold per tonne. A separate resource estimate on the Merensky platinum reef, classed as indicated, totals 47.4 million tonnes at grades of 1.30 grams platinum, 0.7 gram palladium, 0.07 gram rhodium, 0.15 gram ruthenium, 0.03 gram iridium and 0.18 gram gold per tonne.

The resources are near surface and dip gently.

To fund the acquisition, the new company will go to the market for a $30 million financing, consisting of 20 million subscription receipts priced at $1.50. The subscription receipts convert to one Eastern Platinum share and half a warrant. A whole warrant is exercisable at $2 for three years.

Elgin also has a feasibility study under ay at the Mareesburg platinum project, 12 km south of Spitzkop. Reports on resource drilling, metallurgical testing, and mine design are scheduled to come out in the first half of 2005.