LRR: Combine and Conquer

MIKE NIEHUSER, Beacon Rock Research (05/31/2010)
"The corporate combination of Apollo Gold and Linear Gold appears to be a good fundamental match of strengths and needs for the evolving organizations. The combination as structured should present the opportunity for upward rerating of the stock by doubling the market capitalization, consolidating the number of shares of common stock to broaden ownership and enhancing the gold production/development/exploration profile. . .the proposed business combination and corporate structure appear to both enhance fundamental value and mitigate operating risk, and should be well received.

The overall deal is simple and the motivations transparent. Apollo has a producing asset, the Black Fox gold mine in Timmins, Ontario, while Linear has the Goldfields project's Box and Athona deposits under development in northern Saskatchewan. The result of the combination would be a new company under the name Brigus Gold Corp. . .[which] should emerge immediately as a growing junior to mid-tier gold producer, competitive as an investment on both sides of the 49th parallel for both retail and institutional investors. . .Linear shareholders are to receive 5.474 shares of Apollo. After a four for one share reverse split, this would equate to 1.369 shares of Apollo for Linear shareholders following share consolidation."

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