(MENAFN- ProactiveInvestors - UK) Madalena Energy (CVE:MVN OTCMKTS:MDLNF) is to sell its Canadian oil and gas assets in a share-based deal worth C$5.5mln.
The asset sale is part of a broader set of deals which will see a new Canada focussed oil junior in Toronto.
Point Loma currently a private company has agreed to acquire Madalena's Canadian unit which produces some 135 barrels oil equivalent per day from the Paddle River area of Alberta at the same time as it is acquired by Toronto Ventures Exchange listed First Mountain Exploration (CVE:FMX).
For South America focussed Madalena the deals represents a useful divestment of non-core assets.
Details of the reverse takeover and a funding were revealed in a statement released earlier today by First Mountain.
Point Loma intends to raise between C$2mln and C$5mln through a placing.
First Mountain is expected to complete a share consolidation and will acquire Point Loma for the equivalent of C$8.85mln. The company will subsequently be renamed.
Madalena is to receive 6.24mln new (post consolidation) shares in the Canadian company with a deemed price of 40 cents each and it will also have a C$3mln debenture which can be converted into shares in the new company at a later date at a price of 50 cents per share.
First Mountain believes that production from the Paddle River assets can increase to around 650 boepd once facility constraints are overcome in the area. The acquired area spans some 85000 net acres.
Madalena's shares were suspended prior to the start of Tuesday's trading session.
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