Brumby, Marindi in zinc merger

Two well-known mining industry executives will assume control of ASX-listed Brumby Resources in a merger they hope will establish the new company as a producer in the medium term.

Under an all-scrip deal, ASX-listed Brumby Resources will acquire private business Marindi Metals in exchange for 250 million Brumby shares (around $2.5 million) and 25 million options.

The boards of the two companies will merge.

The new entity will be listed as Marindi Metals, while Marindi management team members Joe Treacy, Ross Ashton and Jeremy Robinson will join the board of Brumby.

Mr Ashton, founder of Red Back Mining and a former director of Brockman Resources, will serve as chairman-elect.

Mr Treacy will serve as managing director of the new entity.

He has had previous experience as a foundation director of Kagara Zinc and as inaugural chairman of Mungana Goldmines.

Brumby will undertake a $3.75 million capital raising, with $2.5 million coming through an entitlement issue and $1.25 million through a share placement.

The funding will also be used to target exploration of Marindi’s Newman base metal project in Western Australia.

Existing Brumby chair Geoff Jones will step down at the start of next year and continue to serve as a non-executive director.

“Zinc has one of the most favourable market outlooks of any commodity over the next five years, with the recent and imminent closure of several major mines, including MMG’s Century zinc mine this year, expected to push the market supply into deficit,” Mr Jones said.

“Several major investment banks have recently upgraded their price forecasts in recent months and some commentators are predicting a market deficit of up to 5 million tonnes of annual capacity by the end of this decade.”

Mr Jones is expected to continue to serve as managing director at GR Engineering Services.

Current Brumby director John Hutton will continue to serve in that role.

Brumby was up 55.6 per cent to 1.4 cents per share at the time of writing.