FNX Mining adopts ‘poison pill’

FNX Mining (FNX-T) has adopted a shareholder rights protection plan, or “poison pill,” attaching one right to each of its 50.2 million shares outstanding. The rights will also be issued along with any newly minted shares.

The plan is designed to give the company and its shareholders time to evaluate any takeover bid and consider alternative plans in the face of such a bid. The company says it is not aware of any takeover bid at present.

FNX spokesman David Constable told Reuters the plan was prompted by the recent discovery of high-grade copper/nickel/platinum-group-metal mineralization behind the Levack No. 2 mine shaft, 40 km north of Sudbury, Ont. He said the plan protects shareholders from any quick and hostile bid.

The plan is automatically triggered by an unauthorized bid, or acquisition of more than 20% of FNX’s outstanding shares. In either case, each existing shareholder would be able to exercise his share rights at half the going share price.

To be permitted, a bid must be presented to all shareholders and remain open for at least 60 days. If the bid receives more than half the company’s outstanding shares, the acquirer can take up and pay for the shares, but it must also extend the offer for another 10 days.

Shareholders will vote on the plan May 19.

In late February, drilling behind Levack No. 2 returned up to 3.1 metres (starting at 1,634 metres below surface) grading 26.2% copper and 3% nickel, plus 4.2 grams platinum, 9.8 grams palladium and 0.45 gram gold per tonne, in hole 6010. A 5-metre section lower in the hole yielded 26.2% copper, 3.7% nickel, 5.1 grams platinum, 10 grams palladium and 0.35 gram gold.

The discovery is 460 metres from both the Levack 3600 level and the 1,350-metre Levack No. 2 shaft, currently being reconditioned by the partners.

Hole 6010 was drilled to the southeast and sub-parallel to the Sudbury igneous complex; true widths have not been estimated, owing to limited drill data. A larger drill rig will deepen the hole to around 2,150 metres.

The hole encountered two massive sulphide veins containing chalcopyrite, cubanite, pentlandite and millerite at a depth of 1,190 metres, immediately behind and below the Levack mine, which produced 60 million tons grading 1.8% nickel and 1% copper between 1937 and 1999.

The partners say the newly discovered mineralized system and massive sulphide veins occur at the same stratigraphic location as those at Inco‘s (N-T) McCreedy East deposit, 1.8 km away, and Falconbridge‘s (FL-T) Fraser-Strathcona Deep copper deposits, 3.7 km away.

The partners are also encouraged by the presence of mineralized Sudbury breccia throughout most of the hole. Such breccia is the host to most deposits in the Sudbury Basin.

Down-hole geophysics to a depth of 1,662 metres has outlined a large, complex series of anomalies that remain open at depth. The anomalous area (mostly west of the borehole) includes a 70-by-115-metre highly conductive core in a more variably conductive area measuring 200 by 300 metres.

Drilling and surveying are planned, once four other rigs complete drilling on footwall targets elsewhere on the property.

Levack is one of five formerly producing properties acquired by the Sudbury joint venture in 2003 from Inco. FNX, which has a 75% interest, and Dynatec (DY-T), which has 25%, recently reopened the McCreedy West mine, which was included in the land package.