Chalice, Sub-Sahara unveil merger plans3rd April 2009, 11:00...

Chalice, Sub-Sahara unveil merger plans
3rd April 2009, 11:00 WST

Junior gold explorers Chalice Gold Mines and Sub-Sahara Resources plan to merge, using Chalice’s funds to help develop cash-strapped Sub-Sahara's high grade Zara project in Eritrea.

Chalice has offered one of its shares for every 10.73 Sub-Sahara shares held, valuing the latter at $5.6 million, based on Chalice’s share price of 12 cents on Thursday.

Chalice had $9.4 million in cash and cash equivalents at the end of December while Sub-Sahara had just under $600,000.

Chalice managing director Tim Goyder told AAP that the companies would be solely focused on gold, with the conceptual target of mining 100,000 ounces of the precious metal from the Zara project for six to eight years.

He said there was potential to extend the mine life with exploration targets at depth.

“It’s about pairing our cash with their deposit,” Mr Goyder said.

The transaction is expected to be completed by mid-July.

If the deal goes ahead, existing Sub-Sahara shareholders will hold 39 per cent of the merged entity.

AAP