Please email ft@dealreporter.com or call:Europe: +44 (0)20 7059 6160 Americas: +1 212 686-3076 Asia-Pacific: +852 2158 9714 for further information on dealReporter and how to receive more articles like the one below.
--------------------------------------------------------------------------------------------------------
Idaho General Mines, the listed molybdenum exploration and development company, has been approached by multiple parties eyeing a merger, sources familiar with the company said. A USD 10 to USD 12 price tag is considered to be fair value in the event of a sale at current molybdenum prices of around USD 35, the sources say.
David Russell, an Idaho General board director, said he could not comment on whether companies are calling or not but said it is pretty rare in the market for something not to be discussed. He agreed that a potential sale value would be in that price range if not higher based on the pre-feasibility study of the company's Mount Hope project, a primary molybdenum property, located in Eureka County, Nevada.
Idaho General is also engaged in the exploration and development of properties of silver, gold, base metals and other specialty metals. At the end of last year, Idaho General acquired a second significant molybdenum project, the Hall-Tonopah project, located in Nye County, Nevada.
Russell said if Idaho General's CEO Bruce Hansen is talking to interested parties, the company will probably not get into any serious discussions until after the "bankable" feasibility studies on the Mount Hope Project, which he said is scheduled for August or September. "That's really going to tell you the real value of Mount Hope, what is the real valuation, and what is the real capital that goes into that project," Russell said.
Idaho General's executives did not return calls seeking comment.
Russell said he was sure the results would be very good, describing the asset as fairly high grade compared to most ore deposits in the world that are being promoted or developed. The company states on its website that it is targeting initial production at Mount Hope to begin in 2010.
Russell said once the feasibility study is out, valuations for the company could even be north of USD 12. Idaho General's shares are currently trading at USD 7.46.
When asked about possible buyers for the assets, both sources concurred that Thompson Creek Metals Company, the world's fifth-largest molybdenum producer with a market capitalization of around USD 2.63bn, would be a likely candidate. Thomson Creek changed its name last May from Blue Pearl Mining.
One source said Thompson Creek could be an obvious buyer because it has significant cash on its balance sheet, with USD 114.51m as of 31 March. In addition, Idaho General has "long beaten the drum saying Blue Pearl's reserve base was not all that great", the source added.
Although not speculating on possible buyers, Russell said once the feasibility study is out with permits and a production schedule, Idaho General would probably be out of reach for the mid-size molybdenum companies and would need a larger company to buy it out.
Similarly, one of the sources said looking at Idaho General's position right now of not being a producer; it makes sense for anyone to acquire them to already be producing.
Since the Idaho General's last board meeting, Russell said that the CEO was going to look at retaining a financial advisor but he was uncertain whether that had been accomplished yet. "I have no knowledge of that right now," he said.
But as far as equity raising or financing for Idaho General, Russell said the CEO would not be in the market due to the current bankable feasibility study. "You would not want to do any money raising, or borrowing money or anything until you have that bankable done," he said.
Hall-Tonopah project's main feasibility study is running slightly behind course due to its later acquisition into the company, said Russell. He said that may be completed in a year from now.
Idaho General has a market capitalization of around USD 405m.
--------------------------------------------------------------------------------------------------------
dealReporter is an independent intelligence service geared towards a client base of hedge funds, proprietary trading desks, security lending and institutional fund managers providing extensive coverage of all aspects of M&A, private equity, special situations and rumors across the European, pan-American and Asia-Pacific markets.
dealReporter provides clients with articles such as the one above in real-time via personalized email and BlackBerry alerts and an online platform. For more information
please email ft@dealreporter.com or call: Europe: +44 (0)20 7059 6160 Americas: +1 212 686-3076 Asia-Pacific: +852 2158 9714