Shares in Perth-based exploration company Aragon Resources (ASX: AAG) spiked on news it had struck a deal to acquire Chilean explorer Hot Chili - and they never looked back.
The share price of the gold, nickel and phosphate exploration company more than doubled in value, increasing 15.5c, or 134.8 per cent, to 27c at the close.
The acquisition by way of off-market takeover will elevate Aragon to a significant player in a country of emerging uranium exploration and world class IOCG deposits.
The deal, which is subject to shareholder approval, will transform Aragon into a substantial diversified explorer with 641sqkm of highly prospective acreage in Chile’s Coastal Cordillera.
Aragon chief executive Paul Benson said the company believed these quality assets in Chile gave it a significant opportunity to make an advanced investment in the uranium industry and to firmly establish itself as a significant diversified explorer.
“Aragon will continue to explore and evaluate the key gold, nickel and phosphate projects in Australia while it begins active exploration in Chile,” Mr Benson said.
“With a strategic investment in tungsten explorer Vital Metals Ltd, Aragon is well placed to actively explore these quality assets with approximately $5.5 million in cash and liquid assets.”
The Hot Chili portfolio boasts significant exploration projects within these areas, including the country’s largest uranium project Productora.
The Coastal Cordillera of Chile also represents one of the worlds best iron oxide, copper gold (IOCG) provinces which host several significant IOCG deposits, including Candelaria (360Mt of 1.1%Cu and 0.3g/tAu), Mantos Blancos (400Mt of 1 per cent Cu), Manto Verde (250Mt of 0.75%Cu as oxide) and El Soldado (200Mt of 1.5 per cent Cu).
Hot Chili is an unlisted Australian company focused on acquiring and developing quality exploration and resource projects in Chile, one of the world’s premier and more stable mining countries.
Leveraging off 15 years experience in Chile, Hot Chili have undertaken over 2-and-a-half years of project generation and reviewed over 40 large multi-commodity project opportunities.
This work has laid the foundations for the acquisition of interests in three of Chile’s largest and most advanced uranium projects, including Productora, Los Mantos and Chile Norte.
These projects are considered to contain a combined target mineralisation in the order of 115 to 423 million pounds of U3O8 as well as credits of 1.35 to 2.2 million tonnes of copper metal and 0.74 to 1.45 million ounces of gold.
Aragon has agreed, subject to securing all required approvals, to issue to Hot Chili shareholders one (1) fully paid ordinary share in Aragon for every one fully paid ordinary share in Hot Chili and to Hot Chili option holders one option to acquire one fully paid ordinary share in Aragon at an exercise price of 20 cents, expiring on 30 September 2012.
The agreement is conditional upon Aragon acquiring 100 per cent of the shares and options on issue in Hot Chili.
Hot Chili has 88,000,000 shares and 40,200,000 options on issue. Hot Chili will become a wholly owned subsidiary of Aragon.
The deal will see the number of fully paid ordinary shares that Aragon has on issue rise from 67.5 million to 155.5 million.
A general meeting of shareholders to approve the transaction will be called at a later date.