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Mandalay acquires Elgin Mining for $70 million

VANCOUVER – Toronto-based gold producer Mandalay Resources (TSX: MND; US-OTC: MNDJF) had been on the lookout for acquisitions to boost its near term production profile, and the company found a fit with Elgin Mining (TSX: ELG; US-OTC:...


VANCOUVER – Toronto-based gold producer Mandalay Resources (TSX: MND; US-OTC: MNDJF) had been on the lookout for acquisitions to boost its near term production profile, and the company found a fit with Elgin Mining (TSX: ELG; US-OTC: ELGMF) and its Björkdal operation in Sweden’s Skelleftea mining district. Mandalay announced a friendly cash-and-shares deal for Elgin on June 4, with the estimated acquisition value pegged at roughly $70 million.

Under the terms of the arrangement, Elgin shareholders may elect to receive 37¢ in cash or 0.4111 of a Mandalay share for each share held. Elections will be subject to pro-ration based on a maximum aggregate amount of Mandalay shares of 50 million and a maximum aggregate amount of cash of $25 million. Based on the closing price of Mandalay and Elgin shares on June 3 the implied transaction value of 37¢ per Elgin share represents an 85% premium.

As a condition, Elgin must resolve a number of outstanding reclamation obligations relating to its former coal operations in Kentucky. The company reported $1.2 million in restricted cash securing $2.6 million in reclamation bonds posted with state agencies at the end of March. According to Elgin president and CEO Patrick Downey the company is negotiating a settlement with the requisite state and federal agencies.

Read the complete story at NorthernMiner.com/news/mandalay


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