Merger terms agreed for Scarborough and Mineral Securities

The terms for the proposed merger between Scarborough Minerals and Mineral Securities have been agreed. The merger offer will be implemented by way of a scheme of arrangement under section 425 of the Companies Act of England and Wales.

The share for share offer by Mineral Securities is on the basis of four Mineral Securities scheme shares for every five Scarborough scheme shares. The combination of diversified asset portfolios and successful and complementary management teams of the two businesses offers the opportunity to create significant value for the shareholders of both companies.

The merged company intends to continue to focus on making new early stage equity investments in resource companies and projects. The combined management intends to take a hands-on approach and inject its range of technical and commercial skills to maximize the value of these investments. It will be chaired by Robert Champion de Crespigny (Chairman of Scarborough) and managed by Keith Liddell (Executive Chairman of Mineral Securities). The new company will be owned 55.7% by the existing shareholders of Scarborough and 44.3% by the existing shareholders of Mineral Securities.

The merger is conditional on the restructuring of Mineral Securities to be implemented by inter-conditional schemes of arrangement in Australia and the approval of the merger by the shareholders of both companies. It is anticipated that the merger offer will be completed in June 2007

Crespigny commented, "We are very pleased to have concluded merger negotiations with Mineral Securities. We have a shared vision for the future development of the merged business and are focused on the delivery of long term value for all shareholders. The merger provides greater scale and financial muscle and a strong platform for growth."

"The combination of Mineral Securities and Scarborough is a natural step in Mineral Securities’ progression to becoming a larger resource investment house. I believe the combination of our skill sets and assets with Scarborough’s will enable us to continue to deliver significant value growth for shareholders of the merged company."

The merged company will have a large asset portfolio that will consist of a number of investments in listed companies, together with direct interests in resources assets:

Direct interests

  • Sappes gold project in Greece (100% ownership)
  • Vostok oxide copper project in Kazakhstan (100% ownership)
  • Speewah project in Australia (100% ownership)
  • Qixia JV gold exploration in China (earning a 75% interest)
  • Lady Loretta JV zinc project in Australia (25% interest).

Investments in mining companies

  • Platmin: 16.24% – PGM projects in South Africa
  • CopperCo: 18.59% – copper project in Australia
  • Tianshan Goldfields: 19.99% undiluted/29.92% fully diluted position – gold project in China
  • Buka Gold: 58.43% – gold project in Australia
  • Mineral Sands: 60.57% – heavy mineral sands exploration in Australia
  • Chaarat Gold: 12.18% – gold exploration in Kyrgyzstan.