Canadian mineral exploration company Alpha Copper has entered into a non-binding Letter of Intent (LoI) acquire all the issued and outstanding shares of CAVU Energy Metals.
Under the terms of the LoI, CAVU shareholders are proposed to receive 0.7 Alpha shares for each share of CAVU common stock held.
The exchange ratio values CAVU at $0.33 per share, representing a premium of around 60.67% to CAVU shareholders, based on the 20-day VWAP of each company.
Closing of the deal is subject to certain conditions including completion of due diligence, approval by shareholders, and the Canadian Securities Exchange approval, among others.
Upon closing of the transaction, CAVU shareholders will hold around 30% of outstanding Alpha shares.
The combined entity will become a premier copper exploration company with an expanded portfolio of prospective base and precious metals assets in BC and the Yukon.
Alpha Copper CEO Darryl Jones said: “We believe the addition of CAVU and its Star and Hopper assets to Alpha’s significant project portfolio of properties in British Columbia will be highly accretive for the shareholders of both Alpha and CAVU.
“With the current interest in copper assets, both for traditional uses and to support the expanding demand for battery metals, Alpha will be aggressively pursuing all four assets.
“We look forward to working with the excellent team at CAVU throughout this transaction, and look forward to maximizing the potential of a robust portfolio of high value assets on completion.”
In relation with the transaction, CAVU will appoint a nominee to Alpha Board of Directors.
CAVU CEO Jaap Verbaas, and exploration VP Luke Bickerton will be appointed to operational roles with Alpha.
The proposed transaction is pending a definitive and binding agreement, and the current LoI includes customary provisions, including an exclusivity period ending 31 October 2022.
Alpha and CAVU intend to sign a definitive agreement before 30 September 2022.
Through the acquisition, Alpha will benefit from CAVU’s Star copper-gold porphyry project in the Golden Triangle, Hopper porphyry copper-molybdenum project in the Yukon.
CAVU CEO Jacob Verbaas said: “CAVU is pleased to enter into this proposed transaction, which is at a significant premium to CAVU’s market price.
“We believe Alpha’s regional focus, financing capabilities, and exploration capacity, combined with CAVU’s strong project portfolio of mature exploration assets and technical expertise, create a scenario that mutually benefits CAVU and Alpha.
“In addition, we believe that this proposed arrangement will allow our highly prospective Star and Hopper properties to reach their full potential.”
