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Bonterra Resources enters definitive agreement on Metanor merger

Among the highlights, the deal provides Bonterra with a clear pathway to bringing Bonterra’s Gladiator deposit into production

Bonterra workers examining core
Bonterra's NI 43-101 resource for the Gladiator gold deposit remains on schedule for the second half of 2018

Bonterra Resources Inc (CVE:BTR) has now entered a definitive agreement to combine with Metanor Resources to create a new advanced Canadian gold explorer in a deal valued at C$78mln.

The new group will focus on building out and future mining at the Urban Barry Quebec gold camp.

Among the highlights, the deal provides Bonterra with a clear pathway to bringing Bonterra’s Gladiator deposit into production and  consolidates the entire southern portion of the Urban Barry camp, when combined with its recently executed option with Beaufield.

It also places Bonterra as one of the largest landholders in the region.

Bonterra's  NI 43-101 resource for the Gladiator gold deposit remains on schedule for the second half of 2018, while Metanor's mill infrastructure provides the firm with the opportunity to significantly reduce the capital requirements and timelines to advance Gladiator into potential production.

The pro forma company will have around C$32mln in cash on hand, after a spinout, to further advance the Gladiator project to production, and increase production at Bachelor and Barry.

On June 18, when the deal was announced, Nav Dhaliwal,  the president and chief executive of Bonterra, said: "Bonterra has been an extremely successful exploration company and must continue to evolve and participate in growth opportunities.

"We have quickly and efficiently discovered and developed the Gladiator deposit over the past two years, and now look to put our exploration skills and experience to work on the larger combined land package.

"We believe we will be able to develop a much larger and more significant resource profile within the Urban Barry camp. The availability and ownership of a permitted and expandable processing facility certainly places Bonterra in an excellent position to rapidly and cost-effectively become a significant Quebec-based gold producer."

Under the terms of the letter of intent, Bonterra will acquire all of the issued and outstanding common shares of Metanor for C$0.73 cents in equity consideration per share, at an exchange ratio of 1.6039 Bonterra shares for each Metanor share. This represents an aggregate transaction value of C$78-million on a fully diluted basis.

The purchase price represents a 40% premium to the volume weighted average price of Metanor's common shares on the TSX Venture Exchange on June 15, 2018, and a premium of 30% to the closing price as of such date.

Upon completion of the transaction, existing Bonterra and Metanor shareholders will own approximately 58% and 42% per cent of the pro forma company, respectively.

Immediately prior to the completion of the proposed transaction, Bonterra will complete the spinout of its Larder Lake project in Ontario to current shareholders of Bonterra in order to create a new exploration company called Spinco, which is focused on the growth of this multi-deposit, high-grade project.

The transaction is expected to be completed in the third quarter of 2018 and is subject to shareholder approval.

Bonterra shares nudged up 2.63% in Toronto to C$0.39.

Quick facts: Bonterra Resources Inc.

Price: 1.1 CAD

TSX-V:BTR
Market: TSX-V
Market Cap: $85.24 m
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