Independent Nickel’s board likes revised takeover offer

Victory Nickel (NI-T, VNCKF-O) has tweaked its all-share takeover offer for Independent Nickel (INI-T, INIFF-O), prompting the board to unanimously recommend the deal to shareholders.

The offer was amended from one share of Victory Nickel for each Independent Nickel share to one and one-tenth of a Victory Nickel share for each Independent Nickel share. Victory Nickel has also agreed to appoint two of Independent Nickel’s directors to its board.

The improved offer represents a 35.8% premium to the 20-day volume weighted average price of Independent Nickel shares immediately prior to the initial offer.

“We were able to get the bid price increased by 10%,” says Richard Murphy, president and chief executive of Independent Nickel. “Our independent financial advisors determined that the increased offer is in the best interests of shareholders.”

Murphy has been an advocate of consolidation in the junior nickel sector for several years, partly because larger companies can command higher share valuations.

But it’s more than that. As consolidation continues among junior nickel companies, he argues, those companies “are going to establish resource bases that will attract the attention of the majors,” as well as the brokerage community and mining analysts in Canada and abroad.

Sudbury, Ont.-based Independent Nickel owns 100% of the past-producing Lynn Lake nickel mine in northern Manitoba. It also owns a net smelter return royalty on Victory Nickel’s Minago nickel property in the same province. The NSR pays the company 3% of all mineral product value when nickel prices exceed US$6 per lb.

Victory Nickel has more than 660 million lbs. of in situ nickel in National Instrument 43-101-compliant measured (154 million lbs.) and indicated (511 million lbs.) resources in three sulphide nickel projects. It’s Minago and Mel projects are on Manitoba’s Thompson nickel belt, while its Lac Rocher deposit sits in northwestern Quebec.

In Toronto at mid-day, Independent Nickel was trading at 29.5 a share and Victory Nickel was trading at 32 a share.