Western makes $92-million bid for Nova Scotia gold producer

Terry Coughlan has accomplished what most in the industry only dr eam of. Over the past seven years he has built the largest single portfolio of gold properties in Nova Scotia under the banner of Seabright Resources Inc. and 59%-held subsidiary Seabright Explorations, built two of those into mines (with the potential to pour 45,000 oz of the yellow metal next year) and now stands to make a personal fortune in a $92-million takeover bid an nounced this week.

Not bad for a Bluenoser with no formal background in mining.

Officials of Western Mining, the biggest gold and nickel miner in Australia came to his door last week with $1.2 billion in their back pocket and one thing in mind — to take over Seabright. Under the circumstances, The Northern Miner can say, Coughlan and his board of directors negotiated the best deal they could.

Those circumstances include a situation where Western already holds 6% of the company’s shares — shares which were picked up over the last month and a half at prices about 50% below the market price of the company’s stock prior to the crash of Oct. 19.

The day before the takeover bid was announced, the stock traded at about $5.87, down from a pre-crash price of about $10.50.

Electing to make the imminent takeover as friendly as possible, Coughlan and two other directors, Frederick Hansen and William McCartney, have agreed to accept a price of $8.50 for each common share and $3.00 for each warrant they hold. These account for about 17% of the shares outstanding and 5.5% of the outstanding warrants issued by the company.

If less than 67% of Seabright shareholders agree, Western will be making that same offer to all Seabright shareholders early in the new year.

Western intends to acquire 100% of Seabright’s 10.7 million shares, most of which are widely held.

Of that total, Seabright can identify the holders of only 35%, according to vice-president finance Ken MacDonald. Most of those shareholders, he says, were attracted to the company by management. “So we are confident they will cast their votes in favor of the direction indicated by the directors.”

But is the offer a fair price?

One financial analyst, who agreed to comment only if he not be identified, says the offer is better than fair. He places a value of $5.80 on the company’s shares, assuming both the Beaver Dam and the Forest Hill properties are brought successfully into full production.

Gordon McCreary, an analyst for Alfred Bunting in Toronto, who has just finished an investment report on Seabright, recommends his clients hold their shares until the offer comes out. Then if another offer is not made, he recommends shareholders accept the offer made by Western.

Based on a gold price of $400(US) McCreary estimates Seabright will have earnings per share of 40 cents in 1988, esculating to about 71 cents in 1990.

Western Mining holds a major land position in the Bendigo gold area of Australia — a geological environment similar to that of the Meguma terrain of Nova Scotia where Seabright holds ground. (about 14 inches)