Erdene Resource Development Corp. (TSX: ERD) said Oct. 2 that it will hold an Oct. 26 special meeting of shareholders to vote on a plan to separate its Mongolian metals exploration projects, which will stay within Erdene, from its North American projects, consisting primarily of its 25% interest in the Donkin Coal Project in Nova Scotia.
Donkin will become the major asset of Morien Resources Corp., which is to be listed on the TSX Venture Exchange under the symbol “MOX.”. Upon completion of the arrangement, Erdene shareholders will control 100% of the Mongolia assets through Erdene and 97.25% of Morien.
“We believe the proposed division of our diverse key assets within the two public vehicles will greatly enhance the potential to create value in both the Mongolian metals projects and in the Donkin Coal Project and we are excited to launch these two focussed entities,” said Peter Akerley, President and CEO of Erdene. “We are confident the flexibility we will create within Morien with its interest in what we believe to be a premier global coal asset and the dedication we can commit to the Altan Nar gold project and our other Mongolian metals exploration projects, will prove to be very beneficial to our stakeholders.”
At the Oct. 26 meeting, shareholders will be asked to approve the arrangement, which involves the transfer by Erdene to Advanced Primary Minerals Corp. (APM) of C$1.95m cash and all of Erdene’s North American property interests, comprised primarily of the 25% interest in Donkin, by way of the transfer of the shares of Erdene Resources Inc. (ERI), a wholly owned subsidiary of Erdene, to APM. Following the transfer, ERI and APM will form an amalgamated corporation to be named Morien Resources.
“Erdene’s board and management believe that the Arrangement will enhance the ability of each of the two companies to pursue their independent corporate objectives and strategies, with a view to maximizing long-term shareholder value,” said Erdene’s Oct. 2 statement. “In particular, the Arrangement will allow Erdene to focus on advancing its metals projects in Mongolia, led by the significant new gold discovery at Altan Nar, and will allow Morien to focus on the development of bulk commodity projects in North America, primarily coal projects, led by the Donkin Coal Project.”
Incidentally, the 75% owner of Donkin, international miner Xstrata plc, has said it wants to sell that stake as it focuses on other priorities, including a major strip coal mining development project in British Columbia.
The planned Donkin mine would work from old entries on land on Cape Breton Island in Nova Scotia under the floor of the Atlantic Ocean. Operations would include multiple continuous-miners producing about 3.6 million tonnes per annum (Mtpa) of run-of-mine coal. A coal handling and processing plant will be constructed to produce about 2.75 Mtpa of clean coal for international coking coal markets as well as international and domestic thermal coal markets.