The proposed business combination between Galactic Resources (TSE) and Cornucopia Resources (TSE) has been revised. The new proposal would have Cornucopia shareholders exchange their shares for 0.55 shares of Galactic Resources. The previous agreement, announced in May, had set the share ratio at 0.5. The transaction will be subject to receipt of a final fairness opinion from Burns Fry and Lehman Brothers as well as shareholder and court approval. Galactic anticipates that the business combination will be complete by Dec. 31.
The combination will rationalize the companies’ joint ownership of the Ivanhoe heap leach gold property in Nevada which recently commenced operations.
Galactic has also refinanced its Ridgeway mine in South Carolina. The Ridgeway is a joint venture between Galactic and a unit of Kennecott.
The joint venture has repaid the existing US$31.4 million gold loan (priced at US$453 per oz.) with gold purchased at US$366 per oz. As a result of the repayment, Galactic will realize a profit of about US$3.3 million which the company plans to include in the coming quarters when the gold loan ounces were due for delivery.
The loan will be drawn from a US$55-million credit facility extended to the joint venture by the Chemical Bank of New York and the Bank of America.
Galactic has also amended its 1988 agreement with Homestake Mining (NYSE) with regard to the acquisition of the Brodie property in Mono Cty., Calif.
Galactic has issued Homestake a further one million shares and has deferred until Aug. 27, 1991, its obligation to issue Homestake further shares. At that time Galactic will be required to issue shares worth US$28.9 million, valued at the higher of US$3 per share or the then-prevailing market price of Galactic. The total value will include the one million shares recently issued.
As a result of the share issue, Homestake now owns 5.5 million shares of Galactic or about 12.28%.
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