Tinpo backs off Western Prospector bid

Tinpo Holdings gave Western Prospector Group (WNP-V, WEPGF-o) shareholders a sudden jolt recently, when it unexpectedly announced it was taking its $74- million offer for the company off the table.

The Hong Kong-based private investment firm initially blamed the move on rumblings that the Mongolian government was looking to nationalize the country’s uranium industry.

But even with the withdrawal, Tinpo left the possibility of another deal open, saying that it was still interested in Western Prospector but that the situation in Mongolia would have to improve.

And just two days after the announcement, Western Prospector said it was in discussions with Tinpo

for a new offer that would be “substantially similar to, and no lessfavourable to Western’s shareholders than, those of the offer to purchase shares that Tinpo had previously made.”

That original offer was for $1.34 per share.

Western says Tinpo is reconsidering the withdrawal after talks with Mongolian officials that are bringing it to see that the government will respect the rights of foreign investors in the uranium industry.

Tinpo had been the white knight to Western Prospector earlier in the year, after it was put in play by a hostile bid from Khan Resources (KRI-T, KHRIF-o).Tinpo’s offer trumped Khan’s bid of 58 per share by 130%.

Western owns the Gurvanbulag uranium deposit in Mongolia’s Sad- dle Hills district and indicated it would play hardball with Tinpo when it first announced the withdrawal.

“Western is of the view that Tinpo has no right, contractual or otherwise, to withdraw the offer or to fail in any other respect to perform its obligation to acquire the shares. . . Western intends to pursue vigorously all of its rights and remedies against Tinpo,” it said in a release.

Tinpo said the planned withdrawal was based on an unpublished resolution from the Mongolian National Security Council that it had recently come across. It says the document urged the government to look into full nationalization of the uranium industry and was submitted, unbeknownst to Tinpo, months before it made its offer.

While neither Tinpo nor Western would comment, Khan’s president and chief executive Martin Quick did.

Khan also has extensive uranium interests in the country and Quick says he had not heard of the resolution cited by Tinpo and called its withdrawal suspicious given recent pro-foreign investment comments made by the Mongolian President Nambaryn Enkhbayar.

“We don’t know what Tinpo are talking about. There was a speech as recently as October 1st by the president reaffirming his intention to encourage free enterprise,” Quick says.

“It looks to us like it’s merely an excuse to get out of the bid. There’s no credibility to what they are saying.”

When asked if Khan would consider a new bid should the Tinpo offer disappear, Quick took a wait-and- see approach.

“We made a legitimate bid for Western and then Tinpo came along with $1.34. Then they extended the offer for two weeks and now they’ve just dropped it like a hot potato. We’re wondering what’s going on,” he says. “Will we renew our interest? Time will tell.”

The Tinpo offer was set to expire on Sept. 30 and had received enough support from Western’s shareholders to consummate the deal.