IMX Resources (ASX: IXR) is now a step closer to consolidating the ownership of the potentially significant Nachingwea Nickel Project in one company, after Continental Nickel (TSXV: CNI) shareholders approved the plan of arrangement IMX and Continental first announced in May this year.
The move will simplify the structure of the two companies and reduce the complexities associated with potentially bringing Nachingwea into production.
Pending the issuance of the final order by the Ontario Superior Court of Justice and the closing of the Arrangement, IMX will acquire all of the issued and outstanding common shares in the capital of Continental that it does not already own.
Shareholders of Continental (other than IMX) will receive 3.7 ordinary shares in the capital of IMX and 0.5 of an ordinary share purchase warrant of IMX for each Continental share held.
As a result of the arrangement Continental shares are expected to be delisted from the TSX Venture Exchange at the close of trading on the 18th September 2012, and will resume trading as IMX shares on the Toronto Stock Exchange under the ticker symbol IXR.
Neil Meadows, managing director of IMX, said at the time of the arrangement, "The combination of IMX and Continental results in a stronger company with an impressive pipeline of high quality projects, including 100% of the potentially significant Nachingwea Nickel Project."
"With the project under single ownership, there is now a clear path to advance towards commencing nickel production."
Nachingwea is highly prospective for nickel and copper sulphide, gold and graphite mineralisation, and currently has Measured Resources of 28,400 contained nickel tonnes, Indicated 126,300 contained nickel tonnes and Inferred 135,000 contained nickel tonnes.
News over the near term includes a revised Scoping Study to be issued within weeks. ESIA is under preparation with approval expected in March 2013.
The approval by Continental shareholders is a major milestone for IMX - as the path to nickel production and monetisation at Nachingwea is now simplified.
Nachingwea is one of the world's best un-developed nickel sulphide deposits, which is hosted in a highly prospective new mineral province, and importantly the project is within close proximity to road, port and energy infrastructure.
The production of a premium nickel sulphide concentrate has already been demonstrated with conventional processing technology, with definitive metallurgical test work currently underway.
Production is forecast in late 2015, with the initial phase 10-15ktpa contained nickel and then the expansion to 15-25ktpa contained nickel.
Post the merger IMX will have a market cap. of around $62 million, with cash of $17.5 million (June 2012) and debt of $9 million (June 2012).
This provides an E/V of around $52 million.
Besides Nachingwea, the IMX portfolio includes the 51% owned Cairn Hill Mining Operation in South Australia where it produces a premium coarse-grained magnetite-copper-gold DSO product at a rate of 1.8Mtpa.
The Cairn Hill budget FY13 free cash is between A$35 and A$40 million.
IMX is also actively developing the Mt Woods Magnetite Project on the highly prospective Mt Woods Inlier in South Australia, which at the Snaefell Magnetite Deposit hosts a JORC Inferred Resource of 569Mt at 27% iron - and a Global Exploration Target of between 200-380Mt at 25-35% iron.
Another asset is IMX's 25.65% stake in Uranex (ASX: UNX), which is currently worth close to $5 million.
In considering the very strong portfolio of IMX projects, the current free cash forecasts from Cairn Hill and the asset value of the Uranex stake - the current IMX value is slight - with the potential for a strong near term re-rating.
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