SPRINGDALE, N.L. — The Maritime Resources Corp. board of directors has recommended its shareholders reject the takeover bid made by Anaconda Mining Inc., and Anaconda officials are not too happy about it.
May 1, Doug Fulcher, president and chief executive officer of Maritime, released the directors’ circular in relation to the bid by Anaconda.
“Don’t be fooled by Anaconda’s low-ball, opportunistic share exchange offer,” the circular states.
“They offered one third of the value for our assets (and one-fifth based on current prices) with shares that are trading at highly inflated prices. They are spending more money than they are making and they have less than five months of reserves. Anaconda wants to use your money to fund their agenda.”
May 7, Dustin Angelo, president and chief executive officer of Anaconda, responded with a press release explaining a response his company had sent by letter to Maritime stockholders.
It highlights the “significant benefits” of accepting the offer, and also addresses, “misleading and factually incorrect” statements made in the Maritime circular.
While it says there is nothing in it that detracts from its offer, Anaconda is “concerned and disappointed” by statements that “highlights their underlying motivation of personal entrenchment, rather than any meaningful consideration of this compelling offer.”
These are the latest exchanges in an ongoing feud between the companies since Anaconda announced its intent to acquire all Maritime’s shares March 19.
Maritime Resources holds 100 per cent of the Green Bay Property, located near Springdale. The property hosts the past-producing Hammerdown gold mine and the Orion gold deposit separated by 1.5 km, and the Lochinvar base-precious metals deposit.
Anaconda is a gold mining, exploration and development company, focused in the prospective Atlantic Canadian jurisdictions of Newfoundland and Nova Scotia. The company operates the Point Rousse Project located in the Baie Verte Mining district comprising the Pine Cove open pit mine, the Pine Cove Mill and tailings facility, the Stog'er Tight Mine and the Argyle deposit.
Anaconda made its bid to Maritime’s shareholders in April. Maritime’s board of directors had been asking its shareholders to hold off on a decision while they reviewed it.
The circular also states the offer of 39 per cent of an Anaconda share for each Maritime share is the equivalent of $14 million for an asset the company claims is worth between $71.2 - $92.6 million. It says the offer is not a good value and Anaconda shares are highly inflated.
It also states Anaconda’s future is “highly uncertain,” and shareholders should not make it their investment. It says Anaconda’s assets are “depleting and fast,” with less than five months of ore supply remaining.
The circular states Anaconda will have to raise money to develop its own assets, let alone process ore from the Hammerdown Mine. It says Anaconda is “spending more than it is making.”
Anaconda says allegations that the Point Rousse Project has only five months of ore remaining are false, that it is actually more than two years. The Argyle Deposit will be the next available feed source, and the Goldboro Gold Project is expected to begin production in 2021 and produce gold for about nine years.
Anaconda boasts its resources, workforce and management team as assets to Maritime shareholders. The company also dispelled allegations of spending more than it is making.
Anaconda also stood by its offer as one of good value.
Maritime’s plan
Maritime also outlined its plan and capacity to restart Hammerdown Mine, including the use of Nugget Pond to process the ore.
“The mill would require only modest capital to construct an additional grinding circuit, and Rambler could easily place the gold stream into production,” the circular states.
“Maritime is continuing to advance its Hammerdown Mine and concurrently considering strategic opportunities to enhance shareholder value in the short term,” it states. “The board does not view the hostile bid as adding to shareholder value.”
Anaconda responded that the Maritime plan lacked any meaningful milestones, and the company doesn’t have the management team to execute the development. Anaconda also outlined the benefits to using its Pine Cove Mill over the Nugget Pond Mill.
As for the recommendation to shareholders to reject the offer, Anaconda states it is self-serving. There is only one independent director, according to the Anaconda press release, and two of the four members are the CEO and COO — “who retain more value in their salaries and benefits than in equity.” The release also alleges the CEO and COO have had 33.3 per cent raises in their base salary since the beginning of 2017.
“All actions to date have served to further entrench management at the expense of Maritime shareholders,” the release states.
