Imperial Metals bids for bcMetals

Vancouver — A proposed takeover bid for bcMetals (C-V, BMTLF-O) could catapult Imperial Metals (III-T, IPMLF-O) into a much larger gold and copper producer, assuming the company completes the acquisition as planned and proceeds with development of the large Red Chris copper-gold project in the Iskut region of northwestern British Columbia.

Imperial Metals has offered 95 cash for each share of bcMetals, which represents a 46% premium over the average closing price for the last 20 days of trading to Sept. 7. The company will mail documents related to its takeover bid shortly, and expects the offer to remain open for 35 days following the mailing date.

The offer is subject to regulatory and other approvals, and the acceptance of not less than 90% of bcMetals common shares on a fully diluted basis.

Imperial currently produces copper and gold from its wholly owned Mount Polley mine near Williams Lake, B.C., and copper and molybdenum at its 50%-held Huckleberry mine, also situated in central British Columbia. Both are mid-sized open-pit operations with mill throughput averaging about 18,500 tonnes per day.

BcMetals is proposing to develop a conventional open-pit mine at Red Chris, where more than $30 million has been spent on exploration and mine development to date. A 30,000-tonne-per-day operation is proposed with average annual production for the first five years projected to be 110 million lbs. copper and 75,000 oz. gold, both contained in concentrate, starting in mid-2008.

The company’s efforts to advance Red Chris have met resistance from a dissident group of Tahltan natives who set up a blockade in mid-June to stop a major drilling program aimed at upgrading and expanding resources and reserves.

Other Tahltan members strongly support the project, and hope to find jobs or participate in the potential business opportunities that would be generated by the large-scale project.

The dissident group has also blockaded other resource companies from exploring or developing projects in the region, leading to deep divisions among the Tahltan community, including attempts to replace a chief who supported responsible mineral development in the region.

BcMetals recently obtained an injunction and enforcement order to allow access to the site, which is situated about 12 km east of Highway 37. The protesting natives ignored the injunction, and the subsequent arrest of an elderly native woman was splashed on the front pages of one of the province’s daily newspapers.

BcMetals has obtained the necessary environmental approvals for the project from both federal and provincial agencies, and has taken steps to address concerns raised by natives, such as suspending activity while trout were spawning at a creek crossing the access road.

At last report, proven and probable reserves stood at 276 million tonnes averaging 0.349% copper and 0.266 gram gold, containing 2.12 billion lbs. copper and 1.18 million oz. gold. Measured and indicated resources total 446.1 million tonnes at 0.36% copper and 0.29 gram gold, plus additional inferred resources in several zones.