Placer stands by cash offer to buy Stikine shares

Shareholders of Stikine Resources (TSE) will have the opportunity to accept buy- out offers for their shares from either Corona (TSE) or Placer Dome (TSE). Both major companies recently announced offers to acquire shares of Stikine which owns 50% of the Eskay Creek deposit north of Stewart, B.C.

Placer Dome’s offer of $67.50 cash, or alternatively 3.5 of its shares, was made after Corona announced plans to acquire about 45% of a new company formed by the merger of Stikine and Prime Resources Group (VSE). Prime also owns 50% of Eskay Creek.

In response to Placer Dome’s offer, Corona announced a revised merger deal tied to a complex corporate restructuring which it said would effectively assure control of the project (T.N.M., June 11/90).

Corona’s latest offer appears to hinge on a recent agreement with certain directors and shareholders of Stikine to vote about 1.4 million shares (42%) of Stikine in favor of its proposal. At the same time, Corona also tied up 45% of Prime Resources.

Placer Dome President Tony Petrina expressed surprise that Stikine’s management would “seek to terminate the auction process by locking up to a transaction that appears to be valued well below Placer Dome’s $67.50 cash offer.”

After considering whether to withdraw its offer, Placer Dome decided to take up, on June 19, any and all Stikine shares tendered to its takeover bid “provided there is no change in circumstances.”

“The market has recognized that the Placer Dome offer is superior to the Corona proposal,” stated Petrina. “Our offer should be attractive to all shareholders of Stikine.”

Asked whether Placer Dome might be considering an offer to acquire Prime as well (as is rumored), a company Dome spokesman responded by saying: “Tuesday (June 19) will be key day in evaluating what our next step will be.”

Because Placer Dome’s offer involves hard cash — in contrast to Corona’s offer largely based on a complex share-swap — local mining analysts expect Placer Dome could tie up a sizable equity position in Stikine which would make control of Eskay Creek inconclusive. Stikine management has made no recommendation to shareholders.

Stikine director Bob Evans, who is reported not to have signed the lock-up agreement, conceded “anything could happen” should Placer Dome emerge with a sizable position in Stikine.

“It’s not over by a long shot,” he said. “It’s pretty obvious when you look at the situation that Placer Dome’s going to pick up a lot of stock. Certainly, Corona has a good lock on 42% of the stock, but under the plan of arrangement, it will need 75%.”

But Corona spokesman Igor Levental told The Northern Miner that Corona was confident its latest offer would assure control of the Eskay Creek project.

“All I can say is we have an agreement between ourselves and Stikine management that is signed, sealed and delivered,” he said. “So whatever other shareholders want to do with their shares, they do with their shares.”