Marathon bids for Discovery PGM (March 03, 2008)

VANCOUVER–In the midst of completing a feasibility study on its namesake project, Marathon PGM (MAR-T, MRPGF-O) has made a takeover offer for Discovery PGM Exploration (PTD-V, DPTFF-O) in order to add Discovery’s nearby Geordie Lake deposit to the Marathon project.

Phillip Walford, president and CEO of Marathon, and John Mc- Goran, president and CEO of Discovery, agree the acquisition would be good for both companies. For Marathon, it would significantly and conveniently add to the company’s resource levels. For Discovery, it is perhaps the best way to “expeditiously advance” Geordie Lake, as McGoran puts it.

The bid offers 0.0794 of a Marathon share for each Discovery share. Based on the $4.87 closing price for Marathon’s shares on Feb. 15, the offer values Discovery shares at 39 apiece and the company at roughly $11 million, on a fully diluted basis.

The Discovery board supports the takeover bid and its members have signed a lock-up agreement, ensuring 36% of Discovery’s shares support the move. To pass, the offer needs 66.6% support.

Discovery owns 100% of Geordie Lake, a 15-sq.-km property near Marathon, Ont. The property is part of the Coldwell complex, which also hosts the Marathon PGM-copper deposit. Management at Marathon believes the Geordie resources are amenable to processing at the Marathon PGM-copper development site.

Geordie Lake hasn’t seen a resource estimate since early 2002. At that time, based on considerably lower metal prices, indicated resources stood at 24.4 million tonnes grading 0.537 gram palladium per tonne, 0.03 gram platinum, 0.04 gram gold, 0.326% copper and 2.52 grams silver, based on a $10 per tonne net smelter return cutoff. Inferred resources added 5.4 million tonnes grading 0.626 gram palladium, 0.04 gram platinum, 0.05 gram gold, 0.36% copper and 3.04 grams silver.

In an interesting twist, Marathon’s vice-president of exploration, David Good, worked on the Geordie Lake deposit in his PhD research program.

Discovery moved up 16 on the news to close at 32, just below its all-time high, and on record volume of 1.5 million shares traded.