To strengthen its presence in the Sudbury mining camp,
Aurora shareholders are offered one FNX share for every five Aurora shares. The exchange ratio is conditional on FNX’s weighted share price remaining in the $7.50-to-$11 range during the 10 business days ending June 14, 2005.
At that rate, the proposed transaction values Aurora shares at $1.83 apiece, based on FNX’s closing share price of $9.17 on May 3, the day before the deal was announced.
At share prices exceeding $11, the exchange rate varies such that Aurora shareholders would receive a value of $2.20 per surrendered share; at prices of between $5 and $7.50, the value slips to $1.50 per share. If FNX’s shares dip below $5, the rate shifts to one FNX share for every 3.3333 shares of Aurora.
FNX has already sewn up the support of shareholders owing around 38% of Aurora’s outstanding shares. The transaction requires regulatory approval, as well as the support of at least 66% of the votes cast at Aurora’s shareholders meeting on June 20.
For its part, Aurora has agreed not to solicit competing bids, but retains the right to entertain any unsolicited offers. The proposed deal includes a $1-million break-fee payable to FNX should Aurora opt for a competing bid within a specified period.
Aurora can terminate the deal before shareholder approval in the face of a competing bid that is not matched by FNX. The deadline for a formal agreement with FNX is July 31.
Aurora holds various interests, and an extensive land position in the Sudbury Basin. Its key asset is a 60% stake in the historic Falconbridge mine property, which produced 33 million tons averaging 1.58% nickel and 0.89% copper. In particular, the Falconbridge East mine produced 8.7 million tons grading 1.15% nickel and 0.76% copper.
Combined, the Falconbridge and Falconbridge East mines are estimated to contain 1.6 million tons of “proven” ore grading 1.5% nickel, 0.92% copper and 0.07% cobalt. There are also 790,000 tonnes of “possible” material grading 1.25% nickel, 0.75% copper and 0.06% cobalt. These estimates do not conform to the standards of National Instrument 43-101.
The property also contains more than 8 km of favourable and relatively unexplored Sudbury basin footwall. Earlier this year, drilling by FNX and partner
Aurora also holds a large land position covering a 10-km section of the Foy Offset dyke, which radiates from the North Range of the Sudbury Basin. The dyke is one of several concentric radial dykes related to the Sudbury igneous complex and hosts significant deposits of nickel, copper and platinum group metals.
The company also has exposure to gold through its 16.8% stake in
Pending completion of a formal agreement, FNX plans to review Aurora’s data, with initial work focusing on the Falconbridge mine property. FNX will also assume management of all of Aurora’s exploration programs.
In late 2003, FNX’s Sudbury joint venture moved to full ownership of the formerly producing McCreedy West, Levack, Norman, Kirkwood and Victoria properties, optioned from
In the boardroom, Aurora’s CEO Daniel Innes will join FNX’s board.
The current deal comes less than a month after FNX adopted a shareholder rights protection plan 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.
News of the planned acquisition sent shares in Aurora 81, or 81%, higher to $1.81 on May 4; FNX finished 31 better at $9.48.
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