Ecstall Rejects Mantle Bid

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

In advising shareholders not to tender to the bid, Ecstall said its board of directors considered the opinion of its adviser, Westwind Partners, which it said 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,” said Ecstall CEO Chris Graf.

Graf is also chairman of the company’s board, which includes former coal mining developer Clifford Frame.

Under the bid, which remains open until Jan. 29, Mantle is offering 0.4 of a share for each share of Ecstall.

Two weeks ago, Mantle valued the offer at 47 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 on Jan 8.

Mantle shares eased 5 to 96.

After learning that the bid had been turned down, Varshney said he doesn’t buy the arguments put forward in an Ecstall director’s circular.

“They don’t carry much weight,” he said.

Varshney said Mantle is bringing $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.

Graf was unavailable to comment on Varshney’s remarks.

But in a statement, he said the takeover bid had 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 km north of Mackenzie, B.C.

Graf said the report would 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% for $475,000. Mantle can earn its interest for cash payments of $450,000 and spending of $4 million on exploration.

However, 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 50-$1.60.

“This volatility represents significant risk for Ecstall shareholders,” he said.

Mantle has turned in a number of significant high-grade intersections at Akie since drilling began in late 2005. In 1995, the major calculated an inferred resource (not compliant with National Instrument 43-101) based on only four widely spaced holes of 13 million tonnes grading 8.5% zinc, 1.5% lead, and 13.2 grams silver per tonne over an average true thickness of 6.3 metres.