Stornoway to take up Ashton, Contact shares

Stornoway Diamond (SWY-T, SWYDF-O) has taken up the shares tendered under its bids for Ashton Mining of Canada (ACA-T, AMCFF-O) and Contact Diamond (CO-T, CONPF-O), but Ashton management still opposes Stornoway’s offer.

Stornoway announced that 68.2% of Ashton shares had been tendered to its bid of $1.25 or one Stornoway share plus 1 for each Ashton share. That included a 51.7% interest held by Rio Tinto (RTP-N, RIO-L, RIO-A) subsidiaries Ashton Canada Proprietary and QIT Fer et Titane. The Rio interest was subject to a lock-up agreement that Ashton had challenged at the British Columbia Securities Commission, which dismissed the application to cease-trade the Stornoway bid.

Ashton shareholders that opted for cash, including Rio Tinto, will be getting 0.52 of a Stornoway share and 60 cash for each Ashton share.

Stornoway also had 67.5% of the shares of Contact Diamond, to be taken up at a ratio of 0.36 of a Stornoway share for one Contact. Contact’s parent Agnico Eagle Mines (AEM-T, AEM-N) also gets 17.6 million shares of Stornoway in exchange for $22.5 million in cash, which will go toward the cash portion of the Ashton bid.

Stornoway has extended both bids to Oct. 2, and said it plans to pursue a buy-up of the untendered shares of both Ashton and Contact.

Ashton’s board is holding to its view that the Stornoway offer lowballed Ashton’s value, but chairman John Cole, in a prepared statement, said management still “remain enthusiastic about the company’s prospects and moving forward with Ashton’s new majority shareholder.”