Vulcan, Universal to become one Claire Svircas -- MINING NEWS...

Vulcan, Universal to become one

Claire Svircas -- MINING NEWS --
Thursday, 3 September 2009

WESTERN Australia-based explorers Vulcan Resources and Universal Resources have announced plans to merge, creating a sizeable copper play with advanced projects in Australia and Finland.


The merged group will have a strong cash position given Vulcan’s cash on hand of $A28.4 million.

Under the merger, still subject to due diligence and other conditions, Vulcan shareholders will receive 6.85 Universal shares for every one fully paid Vulcan share.

“It is proposed that the merger will be effected by way of a Vulcan scheme of arrangement,” the companies said in a joint statement today.

“It is envisaged that the enlarged Universal will consolidate its shares on a basis yet to be decided.”

Universal will assess its capital requirements and consider if it needs to raise additional funds to support the merger.

A merger implementation agreement is expected by September 21.

Vulcan managing director Alistair Cowden told MiningNews.net the pending due diligence made him reluctant to discuss detailed plans.

He said both companies had strengths, skills and a focus on copper that put them in good standing for a promising future whatever the outcome of the merger.

“We believe the time is right to consolidate, consolidating juniors is a smart move,” Cowden said.

“Our primary projects are complementary, with our Finland project hosting a high-grade underground deposit with strong by-product credits, whereas Universal’s Roseby in Queensland is a large low-grade open pit with few credits.”

Cowden said if the merger was successful Vulcan would trade under Universal or a newly created name yet to be decided.

“Should the due diligence be successful, we envisage to start marketing our strategies and future growth plans and resolving any outstanding personnel issues,” he said.

Universal owns the Roseby copper project in Queensland, one of Australia’s largest undeveloped open pit copper resources, with 128.54 million tonnes of JORC compliant resources containing 878,000 tonnes of copper and 239,000 ounces of gold.

A detailed feasibility study of a 5Mt per annum mine, mill, concentrator and associated infrastructure was completed in September 2008.

Universal also holds a 100% interest in nine granted exploration permits in the Mt Isa Inlier, northwest Queensland.

In New South Wales, the company has a 90% interest in two projects – Burra and Collector.

Triple-listed Vulcan holds base metals development and exploration projects in Finland.

The company’s principal asset is the 100% owned Kylylahti copper-cobalt project in eastern Finland which has a resource of 8.1 million tonnes grading 1.18% copper, 0.24% cobalt, 0.22% nickel, 0.47% zinc and 0.66 grams per tonne gold.

Shares in Vulcan, which is also listed on the Frankfurt Stock Exchange and the Norwegian OTC, surged as much as 20% on the Australian Securities Exchange this morning, reaching 13.5c in early trade, before steadying to 12.5c.

Meanwhile shares in Universal Resources shed 0.4c or 16.7% to 2c.