Hathor Wins War For Northern Continental

VANCOUVER — Hathor Exploration (HAT-V, HTHXF-O) is set to take over Northern Continental Resources (NCR-V, NCLRF-O) after Denison Mines (DML-T, DNN-X) did not increase its takeover offer for the junior.

In early June, Denison Mines and Northern Continental inked an agreement for an all-share deal exchanging one share of Northern Continental for each 0.092 of a Denison share (or one share of Denison for every 10.87 shares of Northern Continental). The offer represented a 28.7% premium to the 20-day volume-weighted average trading price of Northern Continental and Denison shares.

Northern Continental’s board initially supported the Denison deal, saying the combined company would give shareholders better access to capital, projects, and acquisition opportunities.

Then, on July 16, Hathor one-upped Denison with a superior bid. Hathor offered 0.1389 of a share for every Northern Continental share, which valued Northern Continental shares at 25¢. The Hathor deal represents a premium of 36% over the Denison offer.

Five days later, when Denison announced it was not going to increase its offer, Northern Continental’s board withdrew its recommendation and approval of the Denison deal and accepted Hathor’s offer.

Hathor and Northern Continental are already joint-venture partners: Hathor owns 40% of Northern Continental’s Russell Lake project, in Saskatchewan’s Athabasca basin. Russell Lake does not have a defined resource but sits on strike between two world-class uranium deposits. Some 30 km south is the past-producing Key Lake mine, which now serves as Cameco’s (CCO-T, CCJ-N) regional uranium processing facility; 15 km to the north is Cameco’s producing McArthur River mine. The road between McArthur River and Key Lake runs right through the Russell Lake property.

On the news, Hathor shares lost 7¢ to close at $1.87 each. Northern Continental shares also fell, losing 4¢ to close at 24¢. Denison, which is now entitled to a $450,000 break fee from Northern Continental, saw its share price stay unchanged at $1.92. The company also exercised its right to convert all of the $495,000 it loaned to Northern Continental into shares of the junior at a price of 12.5¢ apiece.