It seems some Temex shareholders were near prescient in spurning Oban Mining. As noted in these pages, back in early June Oban Mining – a vehicle backed by some heavy hitters on the Canadian mining scene – made waves with a rather rare kind of offer: a merger with four other junior exploration companies with cash and/or exploration assets. The deal involved arrangements with Eagle Hill Exploration, Temex Resources, Ryan Gold and Corona Gold. The former two have smallish, but high-grade gold resources, while the latter two mostly have cash.

In this, there was strong support in favour of the Oban proposition by Eagle Hill, Ryan Gold and Corona shareholders with lock-up share agreements covering 57%, 29% and 45% of their respective share counts.

But Temex was another case. As one analyst noted on a conference call around the time of the deal’s announcement last month, only 1% of Temex shareholders agreed to lockup in the Oban deal. Pitiful, really. Indeed, one disgruntled shareholder noted on that same call that the premium Temex would get in the deal (via shares in Oban) was less than the other juniors were getting.

They stand to get it now – or better in more ways than one. On Thursday Lake Shore Gold entered the fray with a superior bid for Temex. The Temex board determined Lake Shore’s (LSG) bid better, noting that it values Temex, in LSG shares, at C$0.13, versus the C$0.11 on offer from the less liquid Oban.

 

Now Oban has ten days to decide if it wants to match or better Lake Shore to try to keep a hold on Temex. It could be difficult to do.

In the first, Temex is Lake Shore Gold’s neighbour in a prolific gold camp in Canada on the Porcupine-Destor Fault through its 60%-owned Whitney gold project, which contains some modest-sized gold resources. Goldcorp is Temex’s partner on the project, and indeed, the property is otherwise jammed between Goldcorp claims and operations. To the southwest of Whitney is Goldcorp’s Dome mill.

And so more plainly put: For Lake Shore, holding the Whitney gold project makes a lot of sense with the potential to source feed to its own reportedly underutilized mill to the north, Bell Creek. (For reference, all these operations are within a 10 kilometre or so radius.)

Kerry Smith over at Haywood Securities put it in an email to me: “It’s a cheap strategic acquisition for Lake Shore. Agreed.”

Secondly, there’s the shares on offer. Lake Shore compared to Oban is way more liquid, and much larger in terms of market capitalisation (relatively speaking). In recent quarters it has been turning around operations and discovering near-mine deposits, and has gained traction on the mining market in Canada. It shares, in fact, are up from C$0.78 at the start of the year, to nearly C$1.30/share in recent trading. It’s daily volume is regularly over 1 million, whereas Oban volume sometimes drops to zero and is typically in the low 100,000s.

In other words, Lake Shore shares may appear a better bet to Temex shareholders.

That said, Oban, could counter that its attraction is the prospect for Temex shareholders to take a more central role in an up-and-coming development story – albeit a much riskier one. We’ll soon see.

Post-script: Oban’s plan is to still go-ahead with the multi-merger in case it doesn’t get Temex – a question that remains up in the air. It said back in June that the deal was not contingent on all four juniors saying yes. It confirmed today that was still the case.