Ecstall rejects takeover bid from Mantle

Vancouver – Ecstall Mining (EAM-V, ESMGF-O) is telling shareholders to reject a takeover bid by Mantle Resources (MTS-V, MTSZF-O) that aims to consolidate the interests of both companies in a British Columbia zinc-lead project.

But Mantle President Peeyush Varshney fired back, saying he is unimpressed with Ecstall’s arguments and insisted that in his view, the proposed combination is in the best interests of shareholders of both companies.

In advising shareholders not to tender into the bid, Ecstall said its board of directors considered the opinion of its adviser Westwind Partners Inc., which has determined that the offer is inadequate from a financial point of view.

“The Mantle offer is not in the best interests of Ecstall shareholders and we are advising shareholders to reject the Mantle offer and not to tender their shares,” said Ecstall chief executive officer Chris Graf.

Mr. Graf is also Chairman of the company’s board of directors, which includes among its members, former coal mining developer Clifford Frame.

Under the bid, which remains open until January 29, Mantle is offering 0.4 of a share for each share of Ecstall. Its offer is subject to at least 66 and two thirds of Ecstall shares outstanding being tendered into the bid.

Two weeks ago, Mantle valued the offer at 47 cents a share based on the closing price of both companies shares on the TSX Venture Exchange on Dec. 15.

News that the offer was rejected left Ecstall shares unchanged at 36 cents, Jan 8.Mantle shares eased 5 cents to 96 cents.

After learning that the bid had been turned down, Mr. Varshney said he is not buying the arguments put forward in an Ecstall director’s circular. “They don’t carry much weight,” he said.

Mr. Varshney said Mantle is bringing it $6.6 million in cash to the table as well as backing from zinc producer Lundin Mining (LUN-T, LMC-X), which holds a 10% stake in Mantle.

Mr. Graf was unavailable to common on Mr. Varshney’s remarks.

But in a statement, he said the takeover bid has been launched ahead of a technical report that will deliver a prefeasibility study and mineral resource estimate for the Akie property which is located about 280 kilometres north of Mackenze, B.C. ,

Mr. Graf said the report will give shareholders a better chance to assess its value.Mantle is currently earning up to a 65% stake in the property from Ecstall.

Ecstall, in turn, has a 40% project stake and an option-to-purchase agreement with Inmet Mining (IMN-T, IEMMF-O) to acquire the remaining 60 per cent for $475,000. Mantle can earn its interest for cash payments of $450,000 and expenditures of $4 million.

However, Mr. Graf said the value that Ecstall shareholders will receive is uncertain and depends on the future value of Mantle shares, which have traded in a 52-week range of $1.60 to 50 cents. “This volatility represents significant risk for Ecstall shareholders,” he said.

As the Northern Miner reported on Dec. 18, Mantle has turned in a number of significant high grade intersections at Akie since drilling commenced in late 2005. In 1995, the major calculated a non_N143-101 complaint inferred resource (based on only four widely spaced holes) of 13 million tonnes, grading 8.5% zinc, 1.5% lead, and 13.2 grams of silver over an average true thickness of 6.3 metres..