Metallica Minerals Limited (ASX:MLM) (‘Metallica') entered into a non-binding letter of intent to acquire Melior Resources Inc. (TSXV:MLR) (‘Melior') from Pala Investments Limited, Takota Asset Management Inc., Belmont Park Investments Pty Ltd., Martyn Buttenshaw and other shareholders on July 6, 2018. On September 12, 2018, a binding agreement was signed whereby Metallica will acquire for CAD 16.8 million. Under the terms of the arrangement, Metallica will acquire all of the issued and outstanding common shares of Melior in exchange for Metallica ordinary shares at an agreed exchange ratio of twenty Metallica shares for every one Melior share.

On completion of the merger, Melior shareholders will hold 64% of Metallica's issued capital, Metallica shareholders will own approximately 36% of merged group and Melior will become a wholly owned subsidiary of Metallica. Metallica will remain listed on the ASX and Melior will be de-listed from the TSX Venture Exchange and cease to be a reporting issuer in Canada. One Option, each exercisable for 20 Shares will be offered for each Melior Option and Melior Warrant. To accurately reflect the Exchange Ratio, the Options issued to Melior Optionholders and Melior Warrantholders will be issued at an exercise price of one twentieth of the existing exercise price payable for each Melior Option or Melior Warrant.

Immediately prior to the completion of the arrangement and subject to the approval of the TSXV, Melior will issue 1 million Melior shares on a pre-arrangement basis to Argonaut Capital Limited (‘Argonaut'). In case of termination, a break fee of up to AUD 0.3 million (CAD 0.28 million) will be payable by the applicable party. Post-merger, the Metallica Board of Directors will consist of three Directors from Metallica - Simon Slesarewich, Peter Turnbull and Ian Jacobson and three Directors from Melior -Mark McCauley, Martyn Buttenshaw and George Lloyd. George Lloyd will assume the independent, non-executive Chairman's role. Simon Slesarewich will retain the Managing Director's role and Mark McCauley; current Melior Chief Executive Officer will assume an executive Director role. On November 19, 2018, Steve Boulton resigned from the Board of Metallica Minerals.

The transaction is subject to Australian and Canadian regulatory approvals, approval of the TSXV, approval of the Supreme Court of British Columbia, listing of shares on exchange, holders of not more than 5% of the issued and outstanding Melior shares shall have exercised dissent rights, resignation of the Directors of and senior officers of Metallica and Melior, shareholder approval of Metallica and Melior and approval of the ASX. The Merger is also subject to the satisfaction of certain closing conditions customary for transactions of this nature. Certain shareholders of Melior, who in aggregate hold approximately 79% of the issued shares, have entered into support agreements to vote their shares in favor of the merger. Similarly, certain shareholders of Metallica, who in aggregate hold approximately 9% of the issued shares of Metallica have entered into support agreements to vote their shares in favor of the transaction.

An interim order from the Supreme Court of British Columbia authorizing, among other things, the holding of the meeting of Melior Shareholders to approve the Transaction, was obtained on October 22, 2018. If the Arrangement receives the requisite approval of Melior Shareholders at the meeting of Melior Shareholders, then a final hearing on the Arrangement will be sought from the Supreme Court of British Columbia on or about December 21, 2018. Melior's special committee has unanimously recommended the transaction and therefore the Board of Melior recommended the shareholders to vote in favor of the deal. Melior convened a special committee of independent Directors consisting of George Lloyd and Rishi Tibriwal to review and assess the proposed transaction. As of November 27, 2018, shareholders of Melior approved the transaction at a special meeting of its shareholders. On December 7, 2018, the Board of Directors of Metallica unanimously recommended the transaction to the shareholders. The closing of the transaction must occur by no later than December 31, 2018.

Argonaut acted as financial advisor and Charlie Malone of Wildeboer Dellelce LLP and McCullough Robertson acted as legal advisors for Melior. Lucy H. Schilling from DuMoulin Black LLP acted as legal advisor and KPMG LLP (Canada) acted as financial advisor and provided fairness opinion for special committee of Melior. James Clare of Bennett Jones LLP and Hopgood Ganim acted as legal advisors for Metallica. TSX Trust Company served as the transfer agent and registrar to Melior. BDO Corporate Finance (QLD) Limited acted as independent expert to Metallica and will receive a fee of approximately AUD 0.13 million (CAD 0.12 million).

Metallica Minerals Limited (ASX:MLM) terminated the proposed acquisition of Melior Resources Inc. (TSXV:MLR) from Pala Investments Limited, Takota Asset Management Inc., Belmont Park Investments Pty Ltd., Martyn Buttenshaw and other shareholders on December 27, 2018.