Mining Company Rejects Merger

Canadian mining company Western Prospector Group last week rejected a takeover bid from a rival company, saying it “significantly undervalues” the company.
Khan Resources’ is offering to purchase 100 percent of all common shares from shareholders, although its bid will now struggle to succeed.
Both companies have interests in Mongolia’s mining resources and their merger would create a significant new player in the industry.
Western’s management asked shareholders not to sell their shares to Khan, who had offered 0.685 of its own shares for each Western share.
“Western is much further advanced toward a production decision than Khan, which is one of the reasons why Khan needs Western much more than Western needs Khan,” said Eric Bohren, the company’s chief executive.


Anchorage Capital Master Offshore, a New-York based private investment fund that holds 19 percent of Western Prospector, said it does not intend to sell its 10.3 million Western shares to Khan.
Khan owns the Dornod uranium deposit, the site of a former Russian open-pit uranium mine, while Western Prospector owns the Gurvanbulag uranium deposit.
The properties sit right next to each other and Khan had estimated that joint development of the companies’ two properties would generate about US$100 million in synergies.
Both companies’ shares are traded on the Toronto Stock Exchange and the offer remains open for acceptance until June 20.


Mongolia’s Prime Minister, S.Bayar, and Director General of the state-owned Russian corporation Rossatom, Sergey Kiryenko, last week (May 26) visited Khan’s Dornod uranium site.
The two leaders then continued on to visit Russia’s Priargunsky uranium ore processing and mining operations in the neighboring Chita region where they went 700 meters below ground into a mine to see uranium ore production.


During the one-day visit, Bayar and Kiryenko agreed to cooperate in uranium production and enrichment, as well as in the construction of small or medium-capacity nuclear power plants.
However, Bayar said that a final deal cannot be signed until the country sets out a clear nuclear energy policy and passes a law on uranium production.
He told Russia’ RIA Novosti agency that the law was being drafted and could be approved after the Parliament reopens in this fall.
Mongolia estimates its uranium reserves at 60,000 metric tons. Russian experts have assessed the country’s reserves at 120,000-150,000 tons.

From
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