The merger would consolidate Serengeti's 67%-owned Kwanika and Sun's Stardust projects, and also Sun's Lorraine project with the neighbouring Top Cat, where Serengeti has the option to earn 100%.
Under the agreement, Serengeti would acquire Sun Metals on a 0.43 per Sun share basis, after which Sun would hold 40% of Serengeti, prior to a concurrent financing.
Sun announced an C$8 million bought-deal raising at 12.5c per subscription receipt.
Serengeti was also planning a two-for-one share consolidation.
"This unique corporate combination creates an exciting, diversified copper-gold developer with a large pipeline of projects, in one of Canada's most prolific porphyry mining camps," Sun director and proposed executive chairman Mark O'Dea said.
Serengeti president and CEO David Moore would remain interim CEO until a full-time CEO was appointed.
"Against the backdrop of a resurgent copper market, this transaction consolidates the ownership of a robust copper-gold portfolio, with near-term development synergy at Kwanika-Stardust and several high priority exploration targets," Moore said.
Korea's POSCO holds 33% of Kwanika.
The transaction was expected to close in late February or early March.
The merger was expected to result in a company with a pro-forma enterprise value of $57.4 million, $9.7 million in cash and a market cap of $70.1 million.
Both companies were in a trading halt yesterday.
Sun (TSXV: SUNM) last traded at 10.5c capitalising it at $18 million (US$14 million) and Serengeti's (TSXV: SIR) last close of 33c valued it about $36 million (US$28 million).
