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Cerro Resources given Federal Court nod for Primero Mining merger

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Cerro Resources (ASX: CJO, TSX-V: CJO) and Primero Mining Corporation have received Federal Court of Australia approval to proceed with a scheme of arrangement under which Primero will acquire all of the shares in Cerro.

The merged Primero entity will be positioned as a leading mid-tier gold growth stock, with a forecast 24% annualised production growth rate to at least 260,000 ounces of gold production by 2016.

Primero will acquire all of the shares in Cerro at the ratio of 0.023 of a Primero share for each Cerro share – representing a 77% premium and valuing the deal at C$119 million.
 
All of Cerro's non Cerro del Gallo projects and interests will be spun out into Cerro’s currently wholly owned subsidiary Santana Minerals.

Cerro’s shareholders will receive an in-specie distribution in relation to the spin out.

The Federal Court's approval follows earlier approval by shareholders at the end of April.

The Court Orders will be lodged with the Australian Securities and Investments Commission tomorrow, at which time the transaction will become effective.


Cerro del Gallo focus

The combined Primero entity plans to focus on progressing the highly prospective Cerro del Gallo gold/silver project in Mexico.

Cerro currently owns 69% of the project, which is at Pre-Feasibility stage.
 
Cerro del Gallo is a gold-silver deposit with 1.15 million ounces of in-pit gold equivalent Proven and Probable Reserves and 1.58 million ounces of in-pit gold equivalent Measured and Indicated Resources.
 
Cerro also owns 100% interests in the Namiquipa silver and Espiritu Santo gold/silver exploration projects in Mexico, as well as Australian project/investment assets.

Wholly owned subsidiary Santana Minerals will be focused on unlocking the high value potential Namiquipa silver and Espiritu Santo gold/silver Mexican exploration projects, with about $A4 million in cash funding.

Primero will provide the $4 million in funding to receive a 19.99% stake in the subsidiary.
 
Primero operates the 100,000 ounce gold equivalent per annum San Dimas gold-silver mine in Durango State Mexico, which is currently undergoing expansion to 160,000 ounces gold equivalent per annum.

Cerro had a cash position of around A$3.2 million at the end of the March quarter 2013.


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