Sun Metals, Lorraine Enter Into Arrangement Agreement to Merge

Sun Metals (TSXV:SUNM) and Lorraine Copper (TSXV:LLC) have announced that they have entered into an arrangement agreement providing for the indirect merger of the companies. Sun Metals is currently earning a 100 percent interest in Lorraine’s wholly-owned Stardust project in northcentral British Columbia.

Sun Metals said that pursuant to the agreement, Sun Metals has agreed to acquire, through a wholly-owned subsidiary, all of the issued and outstanding common shares of Lorraine by way of a statutory plan of arrangement under the Business Corporations Act (British Columbia). Pursuant to the terms of the arrangement, shareholders of Lorraine will receive 0.54 of a common share of Sun Metals, for every Lorraine Share held.

Sun Metals said the benefits of the arrangement were:

  • a simplified ownership structure and a larger public float which should facilitate a broader base of institutional investors and greater liquidity in the Sun Metals shares;
  • for Lorraine shareholders:
    • the elimination of the significant discount in the trading price of the Lorraine shares relative to the market value of Sun Metals’ interest in Stardust;
    • access to greater liquidity as a result of Sun Metals’ significantly higher average daily trading volumes and broadened shareholder base;
    • direct ownership in Sun Metals thereby providing Lorraine shareholders with continued direct ownership in the Stardust projectand
    • the proposed arrangement is not expected to trigger a taxable event for Lorraine as would have been the case had Sun Metals vested the original earn-in on the Stardust project.
  • for shareholders of Sun Metals:
    • the elimination of the overhang that could be created in the Sun Metals shares by Lorraine’s significant ownership block had the terms of the Stardust project earn-in been completed;
    • greater liquidity for all Sun Metals shareholders from the addition of the Lorraine shareholders to its investor base;
    • the avoidance of Sun Metals share selling that would likely occur if a taxable event were to be triggered for Lorraine shareholders; and
    • the avoidance of creation of royalties on the Stardust project.

Click here to read the full Sun Metals (TSXV:SUNM) press release.

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