American Pacific’s other main asset is the Madison brownfields project in Montana and is under option to partner with Kennecott Exploration, a division of multinational mining company Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO).
Under terms of the deal, Constantine shareholders will receive 0.881 shares of American Pacific, representing a 48% premium to the value of the 20-day average share price of Constantine equity.
The deal is a “win-win” for both juniors in a tough market, strategic investor Michael Gentile, the largest shareholder of both companies, told The Northern Miner in an interview. Gentile, who is the largest shareholder in mor ethan 20 junior mining companies, has made it a personal project to take advantage of the depressed market and put good-quality assets together with good-quality management teams.
“A consistent lack of capital has resulted in Constantine’s share of the project diluted over the past several years,” he explained. “Bringing in an experienced management team, with a strong balance sheet and financing connections, makes sense in moving the asset forward with exploration drilling that can grow the asset’s value.”
Gentile pointed out that the market recognized the value of the merger, with the share prices of both companies rising when the deal was announced.
Despite American Pacific shares trending down 40% over the past 12 months at C50¢ per share, it jumped 20% on Aug. 15 when the deal was announced and is still up 4% since then. The company has a market capitalization of C$59 million.