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Dec 5 (Reuters) - PMI Gold Corporation will merge with Keegan Resources Inc to form a new company focused on west Ghana, Africa's second largest producer of gold.
PMI Gold and Keegan have adjacent gold projects in Ghana, where major mining firms such as Newmont Mining Corporation and Anglogold Ashanti also operate.
Existing shareholders of Keegan will not need to exchange their shares. PMI shareholder will receive 0.21 shares in the new company, Asanko Gold Inc, for each PMI share held.
Asanko Gold will have a market capitalization of about C$700 million, the companies said in a statement.
Keegan Chief Executive Peter Breese will be Asanko's CEO, while PMI Gold CEO Collin Ellison will be the President of the new company.
Existing Keegan and PMI shareholders will each own about 50 percent of Asanko Gold.
Keegan appointed Canaccord Genuity as financial adviser, while Macquarie Capital Markets Canada will advise PMI Gold on the deal.
Keegan shares closed at C$3.91 on Tuesday on the Toronto Stock Exchange. PMI's shares closed at 74 Canadian cents.