A takeover battle for
Coastal Gold Corp. (
TSX: V.COD,
Stock Forum) took a new twist Tuesday when the Toronto-based junior said it was postponing a special meeting set up to allow shareholders to consider a proposed takeover arrangement with
Sulliden Mining Capital Inc. (
TSX: T.SMC,
Stock Forum).
Coastal said it is postponing the May 8, 2015 meeting after receiving a revised unsolicited offer from
First Mining Finance Corp. (
TSX: V.FF,
Stock Forum). It said it is delaying the meeting with Sulliden's consent.
Coastal Gold’s flagship asset is the Hope Brook Gold project in Newfoundland, a former gold mine where the company is working to develop an indicated and inferred gold resource of 954,000 ounces.
The company has said the project is located in a mining-friendly jurisdication and the gold is accessible via existing underground workings and local infrastructure, including an air strip and power lines.
On April 28, when First Mining announced its initial offer $0.122 common shares of First Mining for each share of Coastal Gold, it said management had been investigating a number of potential opportunities and sees the Hope Brook project as a target that fits the company's strategy.
On May 3, 2013, First Mining delivered a new proposal that would see the mineral property holding company acquiring all the shares of Coastal on the basis of 0.15 common shares in the capital of First Mining for each share of Coastal Gold by way of a plan of arrangement.
Based on the closing prices of each of First Mining, Coastal Gold and Sulliden on May 1, 2015, First Mining said its new proposal implies a value of $0.06 per Coastal Gold share.
Coastal Gold shares rose 14.3% to 4 cents Tuesday leaving a market cap of $6.8 million, based on 169.2 million shares outstanding. The 52-week range is 45 cents and 1 cent.
Coastal Gold said the special committee of its board of directors has determined that it requires additional time to review the First Mining offer in order to determine if it constitutes a “superior proposal” as defined in the arrangement agreement with Suliden.
It also said the postponement will allow the special committee and its advisors more time to review the First Mining offer and make recommendations to the board.
First Mining Finance is a mineral property holding company. Its principal business activity is to acquire and hold high-quality mineral assets with a focus in the Americas, where it holds a portfolio of 18 mineral assets in Mexico and the United States with a focus on gold.
“We continue to be very interested in a business combination with Coastal Gold, which we think would be in the best interests of our shareholders and the independent shareholders of Coastal Gold,’’ said
First Mining Chairman Keith Neumeyer in a press release.
First Mining shares were unchanged at 40 cents Tuesday, leaving a market cap of 29.5 million, based on 73.8 million shares outstanding. The 52-week range is 55 cents and 38 cents.
Its offer comes after Sulliden Mining issued a news release on April 29, 2015 saying it and Coastal Gold had agreed to amend an earlier deal that was signed on March 1.
Under the amendment, Sulliden said it would acquire each outstanding share of Coastal for 0.05 of a Sulliden common share plus $0.01 in cash.
It said the implied value was $5.4 million, including the assumption of $1.5 million in debt, and the deal would make Coastal a wholly-owned subsidiary of Sulliden.
Sulliden is a venture capital company focused on acquiring advanced brownfield, development-stage and early production-stage mining projects in the Americas. Its asset portfolio includes a 100% ownership of the East Sullivan Gold Project in Quebec. It also has interests in Brazil-focused Aguia Resources and
Falco Resources Ltd. (
TSX: V.FPC,
Stock Forum).
Its board is headed by Chairman Stan Bharti, who runs the Forbes & Manhattan group of companies. Coastal Gold is also under the Forbes & Manhattan umbrella.
Sulliden shares rose 6% to 26 cents on Tuesday, leaving a market cap of $9.6 million based on 36.9 million shares outstanding. The 52-week range is 75 cents and 22 cents.