The fight for what may be North America's biggest chromite deposit is heating up. Last week in this space we wrote that Freewest Resources of Montreal had called in the cavalry, namely Cliffs Natural Resources of Cleveland, OH, to save it from a takeover by Toronto's Noront Resources.
Noront has now topped the Cliffs proposal by sweetening its offer. It will trade two Noront shares and a five-year purchase warrant at $4.00 for each seven Freewest shares tendered. In monetary terms, that works out to $0.86 per Freewest share. Noront insists this is its final offer, and it will expire on Dec. 11, 2009.
Freewest continues to resist. It has advised its shareholders to take no action, and certainly not to deposit their Freewest shares under the terms of Noront's latest offer. To underline its unwillingness, Freewest completed the sale 6.9 million share to Cliffs on Dec. 1, raising $4.1 million for the Freewest treasury. Cliffs also exercised all of its 7.4 million warrants, further fattening the Freewest purse by the tune of $3.3 million. These transactions bring Cliffs' holdings in Freewest to 12.65%.
Does this mean Cliffs will make a better offer? We shall wait and see.
As one CMJ reader wrote after reading what I wrote a week ago: "…the deal is far from complete. The wording you chose in your article used past tense in that it stated Cliffs had 'acquired' Freewest. I don't mean to be petty, but as a shareholder of a number of juniors in the area and a Canadian, it isn't over until the final bell rings."
Our faithful reader is correct. I shall be watching my verb tenses closely in the coming months.
Moreover, our Hot Topic question last week drew several other comments. We asked whether readers would like Canadian mineral resources to remain in Canadian hands or whether American ownership is tolerable. About three out of five respondents think Canadian resources should be mined by Canadians.
Here is a sampling of the comments we received:
"It's like a farmer renting out a field to someone else. He/she gets the money and some else does the work. Most of the employment and service business for the host country would be the same regardless of ownership."
— Dan Hewitt, principal consultant, SRK Consulting
Yellowknife, NT
"Canadian mining companies can own their own resources if they are willing to sell their foreign operations and stop exploring and development mines outside Canada. Don't be hypocritical"
— Pierre Mousset-Jones, professor of mine engineering
University of Nevada Reno
"We are proud when Canadian exploration and mining companies acquire or own projects in other countries (just two examples: Barrick in Argentina, Australia, Chile, Dominican Republic, Nevada, Papua New Guinea, Peru, Tanzania and Kinross in Alaska, Brazil, Nevada, Russia…). How can we then bemoan the takeover of a Canadian mineral property by a foreign company, particularly in the case of a specialty commodity such as chromite? Can't have it both ways!"
— Henrik Thalenhorst, Strathcona Mineral Services
Scarborough, ON
"The answers you are allowing are insufficiently detailed. I have no problem with private ownership [when a] company is regulated by a rule of law and whose country is a market-based economy such as the U.S. and Europe, Australia, New Zealand, India, Japan, Taiwan, South Korea and a few South American countries. However, we should not sell them to any state-owned company or any country that is not free market oriented with proper corporate regulations and a rule of law. This excludes China and Russia, most of the Middle East and Africa, Cuba and sever South American countries."
— Kendall Carey, principal of Carrey Fawcett International
North York, ON
In light of such thoughtful comments, I am going to ask again what our readers think of foreign ownership/exploitation of Canadian resources, but this time you will have more detailed options.
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