"This is healthy for us," said Coles. "It puts us in position for the long term."
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By TIM DAVIS/Star-Tribune Editor
A proposed merger between Virginia Uranium Ltd. and Santoy Resources Ltd. is expected to pump $3.5 million into Virginia Uranium Inc. and position the company for the future.
Virginia Uranium Ltd. is a separate company from Virginia Uranium Inc., but has acted as a financing vehicle for the Coles Hill uranium project, said Patrick Wales, a spokesman for Virginia Uranium in Chatham.
Based on previous financings, Virginia Uranium Ltd. has a 12 percent stake in Virginia Uranium Holdings Inc., the parent company of Virginia Uranium Inc.
Virginia Uranium was formed two years ago to explore the possibility of mining a huge uranium deposit in Pittsylvania County.
Santoy, which is headquartered in Vancouver in British Columbia, Canada, is a mineral exploration company focused on discovering and developing uranium deposits. The company also is involved with coal and coal bed methane exploration.
Walter Coles Sr., chairman of Virginia Uranium, said the merger will provide additional financing for the company.
"It will create a long-term financing vehicle for us so we will have a way to finance any additional studies or if we move into mining and milling," he said.
The Coles and Bowen families own the Coles Hill uranium deposit about six miles northeast of Chatham.
Believed to be the largest uranium deposit in the United States, it was discovered in the early 1980s and is worth an estimated $8 billion.
Virginia has had a moratorium on uranium mining since 1982, but recently the Virginia Coal and Energy Commission agreed to study uranium mining.
The commission's Uranium Mining Subcommittee is scheduled to hold a public hearing on the scope of the study Tuesday, Jan. 6, at 6 p.m. at Chatham High School.
According to a letter of intent, Santoy will purchase 1.6 million shares of Virginia Uranium Holdings for $1 million and an additional 4.1 million shares for $2.5 million.
As a result, the Limited/Santoy minority stake in Virginia Uranium Holdings, also known as Holdco, is expected to increase from 12 percent to just over 20 percent.
Despite the Canadian financing, Coles said Virginia Uranium remains a Virginia company.
"The Coles and Bowen families own 78 percent of the holding company in Canada," he said. "When we close this merger, we'll still own around 72 percent."
Directors and employees will substantially own the balance of the holding company.
Coles said it's common for companies to raise money in Canada for mineral exploration and mining.
"It's the Wall Street of mining," the chairman said.
Norm Reynolds, president and chief executive officer of Virginia Uranium is expected to be appointed chief executive officer of the new holding company.
Reynolds, a geologist and former president of Marline Uranium Corp., which discovered the uranium deposit, has lived in Chatham more than 25 years.
Coles' son, Walter Coles Jr., is expected to be appointed executive vice president of the holding company.
Ron Netolitzky, chief executive officer of Santoy, will continue in the company as a director, and Mike Cathro of Santoy will remain as vice president of exploration.
The merger expected to be approved in April.
"This is healthy for us," said Coles. "It puts us in position for the long term."
tim.davis@chathamstartribune.com 434-432-2791
http://www.wpcva.com/articles/2009/01/01/chatham/news/news52.txt
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