TORONTO, Cananda – Canada Lithium Corp. and Sirocco Mining Inc. were among the most active issues in Toronto on Wednesday after the two companies announced a friendly deal to combine their businesses.
Sirocco (TSX:SIM) gained more than 14 per cent to trade at 43.5 cents on the Toronto Stock Exchange, while Canada Lithium (TSX:CLQ) was up 1.5 cents at 40.5 cents at midday.
Toronto-based Canada Lithium, which has an advanced lithium project in Quebec, is offering shares worth about $120 million based on recent market prices to acquire Sirocco, an iodine producer.
Assuming the deal closes as expected, shareholders of Vancouver-based Sirocco would own 42 per cent of the combined company.
Each party has agreed to pay $4 million to the other party under certain circumstances if the deal doesn’t close.
Sirocco has also agreed in a side deal to provide Canada Lithium with a bridge loan of up to $10 million. Sirocco has the option to receive repayment in Canada Lithium shares.
The friendly offer of 1.175 Canada Lithium shares for each of Sirocco share had a value of 48 cents when the deal was announced, based on the closing value of Canada Lithium on Dec. 3.
Sirocco shares have a 52-week range of 36 to 89 cents and closed Tuesday at 38 cents. Canada Lithium has a 52-week range of 37 to 96 cents and closed Tuesday at 39 cents.