Under the proposed merger agreement, Sequoia shareholders would receive one Cambior share for every 6.3 Sequoia shares. This represents a price of 60 for each Sequoia share, based on the closing price of both companies’ shares on April 19, or a 27.7% premium on the average closing price of Sequoia during the last 20 trading days.
Since Sequoia has 108.1 million fully diluted shares, Cambior will wind up issuing 17.2 million shares to complete the deal.
Sequoia shareholders must vote on Cambior’s proposal before July. Jacques Bonneau, Sequoia’s president and CEO, says Sequoia shareholders can expect to benefit from Cambior’s share liquidity and growth potential.
The deal also provides for a $2-million breakup fee should Sequoia accept a better offer.
Last December, Quebec City-based
Last year, Sequoia lost $600,000 (1 per share) on revenue of $38.8 million, compared with a loss of $4.7 million (10 per share) on $42 million in revenue in 2002.
Sequoia attributed the revenue decline to the slowdown in the North American steel industry in the first half of the year, and to the loss of a dolomite-product customer, which later returned.
Sequoia’s flagship asset is its half-stake in the 3,400-tonne-per-day underground Niobec mine in the Lac St. Jean region. Operated by Sequoia, the mine produces niobium, which is then marketed by Cambior. Mazarin had bought its interest in the 17-year-old mine from Teck Cominco in 2001.
Niobec is the only niobium producer in North America and the third-largest in the world. Sales in 2003 amounted to US$44.4 million.
Sequoia’s dolomite assets are held by wholly owned subsidiary Dolomex, which mines a high-purity dolomite deposit near Portage-du-Fort, 100 km west of Ottawa.
The company’s embryonic graphite business centres around the Lac Knife graphite deposit, near Fermont, Que. There, Sequoia is partnered with U.S.-based
In January 2004, Sequoia added to its industrial-minerals portfolio by acquiring a wollastonite property 100 km northwest of Chicoutimi, Que. (wollastonite is a calcium silicate). It once belonged to the failed junior miner Orleans Resources.
Discovered in the early 1990s and briefly brought into production by Orleans later that decade, the deposit contains 20 million tonnes grading 36.6% wollastonite.
For its part, Cambior has been showing some renewed vitality in the past half-year, with the startup of the Rosebel open-pit gold mine in Suriname, its acquisition of Ariane Gold, and the raising of $41 million.
Rosebel poured its first gold in early March and achieved commercial production shortly thereafter.
Production rates at the mill have, at times, averaged 16,900 tonnes per day — well in excess of its nominal daily capacity of 14,000 tonnes.
At last report, gold recoveries were fluctuating between 90% to 94% and sampled mill grades “corresponded well” with reserves.
Rosebel will be Cambior’s largest mine in 2004, with a production target of 245,000 oz. gold at an operating cost of US$184 per oz.
Overall, Cambior expects to produce 705,000 oz. gold this year at an operating cost of US$221 per oz., while carrying out 34,000 metres of exploration and development drilling.
Cambior acquired Ariane Gold in November 2003, primarily for its Camp Caiman project in French Guiana, 45 km southeast of the capital, Cayenne. Measured and indicated resources there total 10.4 million tonnes grading 2.9 grams gold per tonne, equivalent to 975,700 contained ounces of gold.
The $41-million cash infusion also came in November, with the exercise of 13.6 million series B warrants at $3 each.
Not counting the Sequoia deal, Cambior has 241 million shares outstanding, for a market capitalization of $931 million. Shares last traded at $3.86 apiece within a 52-week range of $1.58-4.95.
Be the first to comment on "Cambior snaps up Sequoia (May 03, 2004)"