Falconbridge plans Novicourt privatization

Facing consolidation itself, Falconbridge (FAL.LV-T, FAL-N) plans to snap up the shares in exploration partner Novicourt (NOV-T) it does not already own.

The major is offering Novicourt shareholders $2.30 in cash for each share tendered, to give the deal a total value of around $17.5 million. The offer represents an 11.6% premium to Novicourt’s average closing share price over the past 90 days.

Falco currently holds a 62.1% stake in Novicourt. The offer is conditional on at least half the remaining shares in Novicourt being tendered.

Novicourt’s board has appointed a special committee of independent directors to review the offer with the backing of independent legal and financial advisers. The review will include a formal valuation of Novicourt; Falco says its offer includes an approximate 21.1% premium to the present estimated net asset value of Novicourt.

If successful, Falco plans to take Novicourt private.

Inco (N-T, N-N) and Falconbridge are still waiting for regulatory approval in the U.S. and Europe to complete their mega merger. Inco recently extended by four months to the end of June its $12.8-billion bid for Falco. The extension is designed to give competition authorities more time to pour over reams of documentation. The European Commission recently began a second phase review of Inco plan. The review could take up to 90 business days.

Both regulators are concerned about the position the combined entity would have in the high-grade nickel market. Such nickel is used in superalloys, which are employed in high-tech products like the rotating parts of jet engines, and in the nickel plating market.

Nova Esperana

Meanwhile, a 9-hole, 2,300 metre drilling program by Novicourt and Falco recently cut copper-gold mineralization in three targets on the Nova Esperana property in Para state, Brazil.

Four holes on the Nova Esperana target, a 1.7-km-long geochemical anomaly in soils, cut mineralized core lengths of 7 to 18 metres, assumed to represent true widths of 5 to 14 metres based on dips seen in field mapping. Samples graded 0.2% to 0.42% copper, with trace gold credits.

At the Sao Jorge target south of Nova Esperana, four holes intersected grades of 0.1% to 0.2% copper, except in hole FSJ05-03, where a 22.1-metre intersection averaged 0.64% copper and a deeper 47.9-metre intersection averaged 0.55%. Both included higher-grade intervals.

A drill hole in the Uniao target, about 6 km west of Sao Jorge, cut a 7.6-metre interval grading 0.29% copper.

One other target, Morro Alto, remains to be tested, and Novicourt plans to do borehole electromagnetic surveys down the holes already drilled. Follow-up drilling is slated for Sao Jorge.

Shares in Novicourt shot up a quarter, or 11%, to a 52-week high of $2.55 in afternoon trading in Toronto following the news on Mar. 15. Falconbridge was 37 better at 38.76; Inco was up 56 at $53.96.