Mano River Resources Inc announced that it has entered into a legally binding Letter of Intent to conclude a broader agreement to merge with TSX-V listed African Aura Resources Ltd pursuant to which Mano will offer 1.57 Mano shares for every one African Aura share in order to acquire the entire issued share capital of African Aura.
The obligation of Mano and African Aura to enter into the broader agreement is subject to certain conditions being met, including the approval of the TSX-V and satisfactory completion of due diligence. The merger will significantly strengthen Mano's position in West Africa, creating a well capitalized iron ore and gold exploration and development company.
Highlights of the Agreement:
1. All share transaction whereby African Aura shareholders will receive 1.57 Mano shares for each African Aura share, representing a premium of 18.7% to African Aura's 60 day volume weighted average share price at market close on April 14th 2009, based on Mano's April 14th 2009 closing AIM price and an exchange rate of CAD 1.80 to GBP 1.
2. Merged entity to be renamed African Aura Mining Inc. which, at completion, will be owned 75% by Mano shareholders and 25% by African Aura shareholders.
3. Proposed board of directors:
A. Luis da Silva - President and CEO
B. David Netherway - Non-Executive Chairman
C. David Evans, Guy Pas and Steven Poulton - Non-Executive Directors
D Kirill Zimin who was previously nominated by Severstal Resources to be its representative on Mano's Board after their investment in the Putu Range project, is expected to be appointed as a Non-Executive Director in the coming weeks and will remain post-merger in light of Severstal's strategic investment.
4. A proposed 1 for 6 Mano share consolidation, as previously approved my Mano's shareholders, expected to take place concurrently with the completion of the proposed merger.
Strategic Rationale for the Merger:
1. Strong operational synergies with highly prospective iron ore and gold assets in West Africa which will considerably enhance Mano's presence in the region with the addition of the following projects wholly-owned by African Aura:
A. 12km long Nkout iron deposit in southern Cameroon. Reconnaissance sampling along a 5km section returned an average grade of 54% iron.
B. Batouri gold project in western Cameroon. Intersections to date include 132g/t Au over 1.0m and 49g/t over 1.5m.
2. Significantly strengthens Mano's financial position with the addition of CAD 5.9 million to treasury as at March 30th 2009
3. Geographic diversification and risk reduction by stepping out of Mano's traditional operating countries.
4. The proposed Board of Directors of the combined company will be strengthened by drawing on the skills and expertise of the African Aura management team.
Mr Luis da Silva president & CEO of Mano and Mr John Gray president & CEO of African Aura said that "We believe that the merger of Mano and African Aura to create African Aura Mining Inc. is a market leading transaction of two companies with similar strong cash positions and highly prospective assets. The transaction is consistent with our respective corporate strategies and will provide both companies with the opportunity for transformational growth. The merged company will on completion of the transaction have an approximate cash position of CAD 11 million and a well diversified portfolio of advanced iron and gold assets in Liberia and Cameroon. We believe these two commodities create a compelling natural hedge for our shareholders in the current uncertain global economic climate. Furthermore, the combination will forge a strong Board of Directors and management team comprising individuals with notable track records in the discovery and development of significant resources, including Guy Pas who co-founded Addax & Oryx, Afren and SAMAX which was acquired in 1998 by Anglogold Ashanti and David Netherway who spearheaded Afcan until it was acquired by Eldorado Gold in 2005."
Mr Dave Evans chairman of Mano River added that "In unanimously agreeing to merge, the Boards of Mano and African Aura are seeking to create shareholder value by capitalizing on the numerous corporate and exploration synergies that exist between our two companies and which will serve to reduce exploration risks by bringing together our complementary assets and technical expertise. We are confident that the resulting company with its larger capitalization will generate enhanced news flow and be more attractive to a greater number of potential shareholders. This in turn will serve to greatly improve the liquidity in the merged company's shares. We plan to create shareholder value by developing our existing assets, continuing to grow the resource base through cost efficient exploration, undertaking appropriate cost and risk sharing joint ventures with major partners and by pursuing further mergers and acquisitions in sub-Saharan Africa."
