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Uruguay Mineral Exploration completes Fortune Valley acquisition, changes name to Orosur

Uruguay Mineral Exploration (AIM: UGY, TSX-V: UME) has completed the acquisition of Fortune Valley (TSX-V: FVX) in a cash and share deal, also announcing a change in name to Orosur Mining and a change in its trading symbol to OMI, which will come into effect on 8 January on the TSX Venture Exchange and 11 January on the AIM market.

Fortune Valley will be acquired for 0.4534 of one UME share and C$0.001 in cash for each share of the company. The deal was approved by the Supreme Court of British Columbia and approval from Fortune shareholders received at a special meeting on 29 December.

As a result, UME acquired 34.77 issued and outstanding shares of Fortune for 15.76 million shares in UME and a cash consideration of C$34,772. Holders of Fortune Valley options are also entitled to receive 1 million shares in UME on exercise of 2.22 million Fortune Valley options.

“The completion of the Fortune Valley acquisition is a major milestone for UME in improving the company’s growth profile in a recognized mining market such as Chile. Our exploration team has been established in Chile and drilling is planned to commence on the Pantanillo project during January 2010,” said Chief Executive of UME, David Fowler.

The company said that the change in name from Uruguay Minerals to Orosur Mining reflected the broader focus on South America gold development rather than mineral exploration in Uruguay.

The merger will set up a Latin American operating gold producer, with a profile of at least 190,000 ounces over the four years to May 31, 2013. The open pit operations at the San Gregorio mine in Uruguay have the potential to significantly improve this production profile and reduce cash costs with the development of the Arenal Deeps underground deposit.

In Chile a planned exploration and development program will target the definition of an NI 43-101 compliant mineral resource. The program is expected to commence within 3 months of completing the transaction. The objective is to create a second production asset for the group within 3 to 4 years.

In addition to the new company’s enhanced production capacity there is further growth potential from the combined exploration portfolio in Chile and Uruguay including the Anillo project in Northern Chile which neighbours the El Peñón mine operated by Yamana Gold Inc (LSE: YAU, NYSE: AUY).

Disclosure: The author does not hold positions in the company