Nor-Quest bid for Northair a “property grab”

A formal offer has been made by Nor-Quest Resources for control of Northair Mines which is now preparing a fairness opinion on the proposal. The hostile takeover bid has already been denounced by Northair President Donald A. McLeod as a “property grab.”

Mr McLeod confirms that Yorkton Securities of Toronto has agreed to provide a fairness opinion on the offer. Independent consultants are also preparing an evaluation of all Northair mineral properties and its 300-ton-per-day milling operation located near Whistler, B.C. The company’s cost study to move and re-erect the plant at its Willa gold property will also be reviewed.

In its offering circular, Nor-Quest President Raynerd B. Carson, referred to comments made by Mr McLeod in a Nov 18, 1986, news release. In that release Mr McLeod stated that Northair was “negotiating for the use of an established mill in the area” which was later purchased by Nor-Quest.

Mr Carson said that Nor-Quest immediately approached Northair about using the 1,200-ton-per-day mill at the Willa property near New Denver, B.C., but was “rebuffed by Northair’s management.” Nor- Quest estimates it would cost about $3 million to achieve production at Willa utilizing its mill which is located at nearby Salmo. That cost estimate compares to $20 million projected by Northair, he noted.

Mr McLeod recommends that shareholders “refrain from any decision regarding the disposition of their Northair shares until they receive our directors’ circular.” Nor- Quest mailed out its formal offer earlier this month. The company has offered Northair shareholders $1 in cash and one fully paid and non-assessable share of Nor-Quest for each two common shares of Northair. At presstime Northair was trading at $2.70 and NorQuest at $4.05.

NorQuest has a small gold mining operation near Prescott, Ariz., which includes a 100-ton-per-day gravity and flotation concentrator. The company is forecasting 10,000 oz of gold production and 60,000 oz silver from the property in 1987 and double that in 1988.

Northair is conducting a $2.1- million exploration program at Willa in which joint venture partners BP Selco and Rio Algom have elected not to participate. So after the program, Northair’s interest in the project will be 68%.

A recent surface drill program has confirmed an earlier intersection of higher grade material in the main zone. A previous surface hole completed by BP Selco four years ago intersected 27 ft of 0.368 oz gold and a recent one by Northair returned 59 ft of 0.287 oz.

Seven out of 11 holes in the recent program returned intersections above 0.1 oz gold per ton. Hole 87-182 encountered 9.8 ft of 0.182 oz and 46 ft of 0.2 oz. Within the latter section was a 16.4-ft interval grading 0.33 oz. The company says these results “correlate to the earlier higher grade intersections” and there is excellent potential for additional tonnage. This particular area is 250 ft north of the West zone which has reserves of 606,000 tons grading 0.22 oz gold, 0.28 oz silver and 1% copper.