PMI Gold Corp. (TSX:PMV) and Keegan Resources Inc. issued a joint statement saying they had mutually decided to abandon the plans because it was unlikely that PMI's shareholders would approve the proposed transaction.
"The termination of the arrangement agreement is not on account of any differences arising between the respective boards about valuation issues or on account of any new facts having come to their attention," the companies said in a statement.
In December, the two Vancouver-based companies announced that the combined company would have an aggregate market capitalization expected in the $700 million range.
A special meeting of PMI's shareholders about the merger that was planned for Wednesday has been cancelled. Keegan (TSX:KGN) still intends to meet with its shareholders on Tuesday to vote on a name change to Asanko Gold Corp.
Neither company intends to pay a termination fee for the severed agreement.