FULL DISCLOSURE: The Deep Dive is long the equity of Sterling Metals.
Sterling Metals (TSXV: SAG) is betting that bigger is better in northern Ontario’s copper district, agreeing to acquire QcX Gold (TSXV: QCX). in an all-stock deal that consolidates much of the Batchewana Copper Belt under a single owner.
The transaction is focused on the consolidation of claims within northern Ontario. The merger creates a contiguous land package of over 35,000 hectares and expands Sterling’s footprint across the belt by roughly 40%, tying together ground around its Soo Copper Project. That belt is a copper rich porphyry-epithermal terrane formed at the meeting point of three major geological structures, and the enlarged position gives Sterling a more continuous hold across its most prospective trends.
The acquired ground also brings fresh targets into the fold, including acreage on trend with the historic Tribag copper mining camp, about 10 kilometres northeast of Sterling’s MEPS discovery. Much of it has seen little modern exploration despite documented copper and gold mineralization and porphyry-style outcrops.
Chief Executive Mathew Wilson commented on the deal, saying, “By creating a consolidated land package exceeding 35,000 hectares, we are expanding our exposure to additional copper and gold targets while increasing exploration discovery opportunities across the broader district that we believe will lead to new economic resources. We believe the Transaction represents an important step in our strategy of building a leading Canadian copper development company.”
Under the terms of the deal, QcX shareholders will receive one Sterling common share for every 4.81026 shares they hold, implying consideration of roughly $0.256 per QcX share based on Sterling’s 30 day volume-weighted average price as of June 1. Sterling will issue approximately 4.7 million shares to complete the deal.
Once closed, Sterling shareholders are expected to own about 90.75% of the combined company, with former QcX holders taking the remaining 9.25%. QcX CEO Albert Contardi is expected to join the combined company’s board.
QcX expects to hold a shareholder meeting in late July, with closing anticipated shortly thereafter, subject to court, shareholder, and TSX Venture Exchange approvals.
Sterling Metals last traded at $1.23 on the TSX Venture.
FULL DISCLOSURE: Canacom Group, the parent company of The Deep Dive is long the equity of Sterling Metals. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
