Uranium-focused miners Crosshair Exploration & Mining Corp. (TSX: T.CXX, Stock Forum) and Target Exploration & Mining Corp. (TSX: V.TEM, Stock Forum) announced Wednesday that they have entered into an agreement to combine their businesses.
Shares of Crosshair were down 21.7% to 23.5 cents on the news, while Target Exploration surged 38.9% to 25 cents.
The companies say they have agreed to combine on the basis of 1.2 common shares of Crosshair being issued for each outstanding share of Target, with Crosshair issuing approximately 14.6 million common shares, representing 15.4% of the company’s shares outstanding.
Crosshair is focused on exploring and developing uranium in the Central Mineral Belt of Labrador, while Target is a uranium resource company with projects located in the US, including its flagship project, Bootheel, in Wyoming.
Crosshair and Target say the transaction is expected to be completed before March 29, and Crosshair would acquire all of the issued shares of Target, making the company a wholly-owned subsidiary of Crosshair. Mark J. Morabito, president and CEO of Crosshair will become chief executive officer of the combined company and Stewart Wallis, president of Target will become president of the company.
"Although our CMB Uranium Project in Labrador is not directly affected by the Nunatsiavut Government's decision to place a moratorium on uranium mining until March 2011, the moratorium has affected market sentiment towards the region and this cannot be ignored," said Morabito. "We are therefore very excited to be acquiring a uranium asset with near-term production potential in a uranium producing region," he added.
"Raising cash in these markets is very difficult and would be extremely dilutive," said Wallis. "Crosshair has the cash to advance our asset in Wyoming towards production in addition to an advanced exploration project in the CMB of Labrador that will realize its true value in the fullness of time. We view this as a win-win opportunity for the shareholders of both organizations to participate in the two exciting projects," he noted.
On the Crosshair Bullboard, Stockhouse member cocome10 commented on Wednesday’s announcement, saying: “Looks like the market thinks TEM got the better end of that deal!!![sic].”Bb 2