04/06/2009 - 13:19

Chalice, Sub-Sahara merger not fair

04/06/2009 - 13:19

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An independent expert has deemed the merger between gold juniors Chalice Gold Mines and Sub-Sahara Resources as reasonable but not fair.

An independent expert has deemed the merger between gold juniors Chalice Gold Mines and Sub-Sahara Resources as reasonable but not fair.

Earlier this year, the companies announced their intention to merge through an all-scrip scheme of arrangement, which has been lodged with the Australian Securities and Investments Commission for review.

Under the merger deal Sub-Sahara shareholders will receive one Chalice share for every 10.73 Sub-Sahara shares held.

Today an independent expert's report, compiled by BDO Kendalls, was released which concluded that the merger was in the best interests of shareholders.

"In our opinion, if the Scheme had been in the form of a takeover we would have concluded that the proposal was not fair but reasonable," BDO said in the report.

"The Scheme is not fair because the value of 10.73 Sub-Sahara shares prior to the announcement of the scheme is greater than the value of a Chalice share following the implementation of the Scheme.

"However, we consider the Scheme to be reasonable because the advantages of the Scheme to Shareholders are greater than the disadvantages.

"In particular, we have considered Sub-Sahara's need for cash to fund the development of the Zara Project."

The merger was designed to consolidate ownership of the project in Eritrea, combining Chalice's strong cash position with Sub-Sahara's 69 per cent interest in the Zara.

Chalice has also loaned Sub-Sahara $450,000 earlier this week, which will be used for the development of the project.

The loan must be repaid if the merger does not proceed before the end of September this year.

Shares in Chalice were down one cent to 25c while shares in Sub-Sahara were up 0.1c to 2.6c.

 

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