Mustang Resources Ltd (ASX:MUS) has agreed to merge all of its ruby interests with Fura Gems Inc (CVE:FURA) for $10 million in Fura shares.
The shares will be issued in three tranches over 20 months and give Mustang about an 8% stake in Fura.
The merger will see the Montepuez Ruby Project in Mozambique managed by a specialist gem company in Fura enabling Mustang to solely focus on its Caula graphite-vanadium project.
Positioning to realise maximum value from both assets
Mustang’s managing director Dr Bernard Olivier said: “Both Montepuez and Caula are outstanding assets in their own rights with substantial growth prospects.
“But the reality is that they don’t sit together comfortably in a publicly-listed company, where investors tend to have an interest in one or the other of these very different businesses.
“In simple terms, this merger will benefit Mustang shareholders by giving them ongoing exposure to the ruby assets and Fura’s other ruby and gemstone assets via the shares in Fura."
Fura led by former Gemfields COO
Fura is led by former Gemfields chief operating officer Dev Shetty with interests in the Montepuez gem-field and the legendary Conscuez emerald mine in Colombia.
Olivier added: “At the same time, the ruby assets will be managed by some of the world’s leading gem mining and marketing specialists, whose company has committed to spending A$25 million on their exploration and resource definition work program.
“Fura will also bring the critical mass required to compete with established players in the ruby market."
Maiden vanadium JORC resource expected in coming days
Olivier added: “The transaction will allow Mustang to focus solely on exploring and developing its Caula graphite-vanadium project, which continues to go from strength to strength on the back of strong drilling and metallurgical results.
“We are anticipating being able to announce our maiden vanadium JORC resource and significantly improved graphite JORC resource within the coming days.”
READ: Mustang Resources reveals further strong vanadium and graphite assays from Caula
Closing of the transaction is subject to satisfaction of customary conditions precedent on or before 30 November 2018, including Mozambican government approval.