Shareholders to vote on deal with Castillian Resources
The site of the Castillian Resources’ exploration camp, for its Hope Brook gold project. The project has focused on defining the available gold resource in the area and has drawn the interest of the president and board of directors of Ridgemont Iron Ore. — File photo
The board of directors for Ridgemont Iron Ore is unanimously in favour of merging with Castillian Resources and refocusing on Newfoundland gold, over Labrador iron ore.
The decision to create a new company, one focused on a gold prospect in the Hope Brook area, is now headed to Ridgemont’s shareholders for a vote.
“Ridgemont had cash. It had a project (in iron ore) that it would have needed quite a few million dollars, extra million dollars, to advance,” explained Konstantine Tsakumis, responsible for Ridgemont’s investor relations, when contacted by The Telegram Wednesday.
Tsakumis said a change in the market, specifically the support for junior mining companies in iron ore, has pressed Ridgemont to change its plans.
Ridgemont has a 100 per cent stake in the Lac Virot iron ore project in the southern Labrador Trough. That area is found within 20 kilometres of four producing mines in Labrador West.
“As far as I know, the (iron ore) assets will be coming with Ridgemont over to Castillian and eventually— I don’t know what management’s goal will be. I don’t know if they’ll be looking to divest or option those out down the road. It’s a possibility,” Tsakumis said.
On May 3, Ridgemont and Castillian signed a definitive arrangement agreement, with the principal terms of the merger and a letter of intent.
News of the proposed deal was reported by The Telegram in mid-April and remains the same, save that Ridgemont president and CEO Brian Penney has waived severance payments that would have been triggered in exchange for Ridgemont shareholders getting a bump for their common shares in that company.
“I think it’s one of those win-win deals. It’s good for both companies,” Castillian Resources president and CEO Bill Pearson said.
Pearson had previously said his project had become strapped for cash, advancing towards its preliminary economic assessment (PEA).
An injection of funds from Ridgemont’s side will pay for a key 5,100 meters of diamond drilling, along with technical and engineering work needed for the PEA.
As for the iron ore asset of Lac Virot, “the property is in good standing for quite a while,” Pearson said.
He did not commit to any particular course of action in regards to that project, even when asked specifically if he would advance work on the holding.
“I never say never to these things,” he said.
If the directors of both companies get their way, the PEA for Hope Brook is expected under the new company by early 2014.