Goldcorp makes $238-million bid for Canplats

Vancouver – In just two years, Canplats Resources (CPQ-V) has followed red-stained road fill from a Mexican backroad all the way to a $238-million takeover offer from Goldcorp (G-T, GG-N).

In late 2007 Canplats geologists, driving along a secondary road south of Goldcorp’s Penasquito mine in Zacatecas state, Mexico, noticed the distinctive reddish-brown of mineralized alteration in the crushed-rock road fill. They traced the crushed rock back to its quarry, staked the ground, and were soon pulling broad mineralized intercepts from the ground, such as 183 metres grading 1.61 grams gold per tonne, 12.84 grams silver per tonne, 0.49% lead, and 0.31% zinc.

Within a year Canplats defined a significant resource at the project, which had been named Camino Rojo, or Red Road. Now, another year later, Goldcorp has come to the table with a takeover offer to get its hands on the promising polymetallic project.

In the all-share deal, for each share held Canplats investors will receive 0.074 Goldcorp shares and an interest in a new exploration company that will hold all of Canplats’ exploration projects outside of Camino Rojo. Shares of the new company have been given the notional value of 18¢ a piece, which brings the value of the offer to $3.60 per share, a 41% premium over the closing prices of Canplats’ and Goldcorp’s shares on Nov. 13th.

The deal carries a $238-million price tag, based on the fully diluted in-the-money shares outstanding. Goldcorp will have to issue roughly 4.3 million shares in the deal, though the exact number will depend on the number of warrants and options exercised under the arrangement. The deal, which has been approved by the boards of directors of both companies, still needs to achieve support from Canplats shareholders.

In a statement, Goldcorp’s president and CEO Chuck Jeannes discussed how Camino Rojo fits very well into the major’s goal of enhancing opportunities in and around its core assets. The Red Road project is 50 km southeast of Goldcorp’s operating Penasquito mine.

“The Camino Rojo project will benefit from strong synergies with Penasquito in the areas of human talent, infrastructure, and stakeholder partnerships,” Jeannes said. “In addition, our total land package in the district will now exceed 4,600 sq. km, providing an abundance of compelling exploration targets.”

Camino Rojo’s Repressa deposit is home to 163.4 million measured and indicated tonnes grading 0.66 gram gold, 11.56 grams silver, 0.37% lead, and 0.19% zinc. Inferred resources add 31 million tonnes averaging 0.56 gram gold, 7.63 grams silver, 0.31% lead and 0.1% zinc. Combining all three resource categories, Canplats has defined 4 million contained oz. gold and 68 million oz. silver.

In mid-October Canplats completed a preliminary assessment of Camino Rojo. The study investigated the economics of an open pit, heap leach operation processing only oxide and transitional mineralization; the deposit’s extensive sulphide mineralization was not considered.

Over a 10-year mine life an operation at Camino Rojo would churn out 1.7 million oz. gold and 34.2 million oz. silver from an open pit with a strip ratio of 0.7 to 1 and average head grades of 0.71 gram gold and 14.2 grams silver. A daily throughput of 20,000 tonnes results in annual production of 122,300 oz. gold and 902,100 oz. silver.

Using base case prices of US$750 per oz. gold and US$13.50 per oz. silver, the mine should be able to produce an ounce of gold for US$340, net of by-product credits. The operation would generate a 32.5% internal rate of return (IRR) and carries a net present value (NPV) of US$194.9 million, using a 5% discount rate. Using prices closer to today’s spot values, namely a gold price of $1,036 per oz. and a silver price of US$17.19 per oz., the IRR climbs to 65.7% and the NPV reaches US$477.2 million.

To develop the open pit, heap leach operation is only expected to cost US$133.8 million.

The exploration company borne out of the deal will hold Canplats’ other Mexican exploration properties. Canplats holds six other prospective pieces of ground, all of which are early-stage targets in Durango and Chihuahua states. Canplats shareholders will own just over 90% of the new company, with Goldcorp retaining the remaining interest.

On news of the Goldcorp takeover offer, Canplats’ share price climbed almost to the offer level, gaining 96¢ or 37.6% to close at $3.51, a new 52-week high. In January Canplats shares could be had for $1.03. The company has 58 million shares outstanding.