Strathmore Minerals (TSE:STM)(OTCQX:STHJF) said Monday it has agreed to acquire Saratoga Gold Company, whose primary asset is the Copper King property in Wyoming, as it aims to expand its mineral base beyond uranium.
BC-based private company Saratoga's main project comprises two State of Wyoming leases, totaling 1,120 acres in the Silver Crown Mining District of Wyoming.
Saratoga also holds 52 lode mining claims in the State of Montana, near Tintina Resources' Black Butte copper-cobalt-silver project.
"We are very excited about this opportunity to create value for Strathmore's shareholders outside of our core uranium business, by acquiring this significant gold-copper project," said president and CEO of Strathmore, David Miller.
"Our major focus on uranium has not changed with the largest drilling and permitting budget in Strathmore's history recently approved by the Board for moving the Roca Honda and Gas Hills projects forward.
"This acquisition enables Strathmore to enhance its mineral base with an advanced gold-copper project within our geographic area of expertise. Our experienced Wyoming based geological and permitting technical team can effectively manage this project."
Copper King is a shear-zone controlled gold-copper mineralized deposit, enveloped within a larger shell of disseminated and stockwork mineralization.
Historically, the property has been explored by several operators before being acquired by Saratoga in 2006.
A historical resource estimate of the property consisted of 46.29 million measured and indicated tons grading 0.019 ounces per ton, and 0.17% copper, for a contained resource of 866,000 ounces of gold and 153.0 million pounds of copper. The 1995 resource estimate used a 0.010 ounce per ton gold-only cutoff.
In 2007, Saratoga completed 18,288 feet of drilling in 28 holes to confirm mineralization outlined by previous historical operators, with another eight holes completed in 2008.
Strathmore said the deposit remains open along trend and at depth. The company plans on preparing an NI 43-101 compliant technical report and resource estimate that includes Saratoga's drill results, as well as Strathmore's own planned confirmation drilling later this year.
Strathmore said it will contract Mineral Development Associates to continue the due diligence originally undertaken by Saratoga.
Saratoga's CEO, Norm Burmeister, added: "We approached Strathmore with this opportunity because of their reputation and expertise in development and permitting in Wyoming.
"Saratoga's shareholders look forward to continuing with the progress made on the Copper King project under Strathmore's guidance."
Under the agreement, Strathmore has agreed to issue 1.25 of its common shares for each common share of Saratoga. Based on 14.6 million Saratoga shares outstanding, Strathmore will issue 18.25 million common shares to complete the transaction.
In addition, Strathmore has agreed to pay for any shortfall in transaction expenses incurred by Saratoga.
The two companies have also decided on a C$250,000 break fee payable to Strathmore in the event the agreement is terminated under certain circumstances.
Saratoga's board has already approved the deal, which requires two thirds Saratoga shareholder approval. Saratoga shareholders that collectively own around 47.3 percent of the company's shares have entered into lock up agreements with Strathmore, the parties said.
The transaction is expected to close around May 15, subject to regulatory approvals.
Strathmore Minerals is a Canadian resource company specializing in the strategic acquisition, exploration and development of uranium properties in the United States.
Earlier today, the company announced it has set the largest budget in its history for 2012 to aggressively advance its core Roca Honda, New Mexico and Gas Hills, Wyoming, Uranium development projects.
Strathmore's 2012 capital budget will total $15.8 million, including $3.0 million from its partner Sumitomo for the pro-rata share of permitting and development expenditures at Roca Honda. The Roca Honda budget totals $7.4 million.
The Gas Hills budget has been set at $8 million as part of the strategic definitive agreement announced with KEPCO, and the company also set aside $0.4 million for non-core properties in Wyoming and New Mexico.