ASX-listed Mont Royal Resources has agreed to acquire TSX-V-listed Commerce Resources in an all-share deal valued at C$17.2-million, combining their assets into a dual-listed, Québec-focused critical minerals explorer and developer.

Under the agreement announced on Friday, shareholders of Vancouver-based Commerce will receive 2.3271 Mont Royal shares for each share held, implying a value of C$0.093 a  share. That represents a 55% premium to Commerce’s closing price on April 8 and is based on a 30-day volume-weighted average price of A$0.04391 for Mont Royal shares prior to their suspension in February.

The proposed merger will bring together Commerce’s Ashram rare earths and fluorspar project and Eldor niobium exploration asset with Mont Royal’s Northern Lights lithium project. The new entity will be listed on both the ASX and the TSX-V.

Commerce shareholders will own about 85.3% of the combined company, while Mont Royal investors will hold about 14.7%, before taking into account a concurrent equity raise and convertible note financing.

“This transaction is a great opportunity to create value for both groups of shareholders,” Mont Royal executive director Peter Ruse said in a statement. “Combining the proven exploration and management skills of the Commerce and Mont Royal teams with the large resource at Ashram and the additional upside at the Eldor niobium project will have the potential to unlock value for shareholders.”

Commerce executive director Jeremy Robinson said the deal would give the combined entity the expertise, funding and dual listing needed to advance development and exploration across the portfolio.

“The team at Commerce is excited at the prospect of working with the Mont Royal team to create a new Canadian-focused critical metals company and to maximise the value of our outstanding flagship asset at Ashram,” Robinson said.

“This merger will provide a dual listing on the ASX and TSX-V, funding, additional expertise and a clear strategy to generate superior shareholder returns through completion of the studies at the Ashram project while also unlocking additional exploration upside at the Eldor niobium and Northern Lights exploration projects.”

The deal is contingent on Mont Royal raising up to A$10-million through a public equity offering, with proceeds earmarked to advance a preliminary economic assessment at Ashram, progress work at Eldor, and continue exploration at Northern Lights.

Commerce will also pursue a C$2.2-million convertible note financing with existing and new investors to fund interim development work on Ashram and for working capital. These notes will convert into Mont Royal shares upon completion of the transaction.

Following the transaction, the combined company’s board will comprise three directors from Commerce and one from Mont Royal. Cameron Henry, appointed by Commerce, will serve as nonexecutive chairperson. Robinson and Adam Ritchie will also join the board, with Mont Royal’s Ronnie Beevor expected to serve as nonexecutive director. A new CEO and president is expected to be named prior to closing.

The companies cite several strategic benefits from the merger, including greater capital markets access, a broadened shareholder base and a more compelling peer comparison for Ashram on the ASX, which hosts a larger pool of rare earth development companies.