Vengold decides against acquisition of St. Philips

The proposed acquisition of all the shares of St. Philips Resources (VSE) by Vengold (TSE) will not proceed.

Vengold had offered to purchase all the issued shares of St. Philips in return for Vengold common stock based on a ratio of one Vengold share plus half a warrant for each two and a half shares of St. Philips. At the time of the offer, Vengold was trading at about $11 per share, making the bid worth more than $4.40 per St. Philips share.

John Ivany, St. Philips president, said the bid cancellation is a result of the steep drop in Vengold’s share price since the offer. Vengold recently traded at the $4 level, making the takeover bid worth about $1.60 per share. St. Philips’ major asset is its 40% interest in the Kemess South gold-copper property in north-central British Columbia. The property, which is 60% owned by El Condor Resources (VSE), hosts an estimated minable reserve of 220.9 million tons grading 0.22% copper and 0.018 oz. gold per ton. “On the whole, Vengold substantiated the prefeasibility study numbers, finding no material differences,” Ivany said.

A limited amount of companies would be interested in St. Philips’ minority position and, as a result, Ivany said the company will likely have to wait for El Condor to find a buyer for its interest.

Ivany hopes a buyer for the 60% interest will be willing to pick up the balance from

St. Philips.

El Condor and St. Philips have had discussions regarding a possible combination of the two companies, but Ivany said an agreement could not be reached on a share-exchange ratio. The two main sticking points are the value of El Condor’s control position and the value of its 100% owned Kemess North property adjacent to Kemess South.

Meanwhile, the joint venture is completing the engineering and environmental studies required for a mine development certificate.

Ivany expects to receive the certificate late this year or early in 1995, and believes this will make Kemess South much more attractive to prospective purchasers.