Northair “will oppose” Nor-Quest takeover offer

Saber rattling sometimes occurs before outright war but the big guns are firing already in a proposed takeover offer for Northair Mines by Nanaimo-based Nor-Quest Resources.

Incensed by an offer which he describes as a “property grab”, Northair President, Donald McLeod, argues that it’s an “insult to the intelligence of our shareholders”. The takeover proposal would see Nor-Quest offer one of its shares plus $1 for two shares of Northair, something he protests is “not in the best interest of Northair shareholders”.

Nor-Quest concedes that it’s after the Willa mine property in the Nelson area which Raynerd B. Carson, president, asserts can be brought into production within the calendar year based on Nor-Quest engineering studies. He tells The Northern Miner that Nor-Quest recently discussed a possible joint venture agreement with Northair but nothing came of it. The informal discussions also included a property visit to Willa and a look at mine plans and sections.

He says that Nor-Quest has a fully-equipped 1,200 ton-per-day mill in the area which a leading B.C., engineering firm has independently valued at approximately $11.5 million. It was purchased over three months ago for $300,000. Sources have told The Northern Miner that Nor-Quest’s offer for the mill came in at the last minute, defeating one bid that was directed at the salvage potential of the plant. The independent estimate includes other mine buildings and a tailings area that he says is licensed.

Known previously as Cominco’s HB mill, the now defunct David Minerals purchased the facility in 1981 and spent $3.5 million rehabilitating and expanding the plant over the next two years. What if anything was spent after that has not been made public. The company’s intent was to custom mill ore from the region but only 3,342 tons of material was processed before closing in March of 1983. The mill includes a leaching circuit which was designed in part to recover gold from molybdenum concentrates.

Citing the $300,000 purchase price, Mr McLeod contends the mill “isn’t worth 1 cents more today than it was then” and even less “without an orebody to back it up”. Northair’s geological consultant at Willa, Dr Paul Richardson, was vice president exploration for David Minerals so he is probably familiar with the mill.

According to Mr McLeod, Northair is in a sound financial position and production financing could be arranged as required. “We’re not looking for a partner, and if we were, it certainly wouldn’t be these guys,” he says.

Pointing out that Northair management will oppose the bid with every means at its disposal, he argues that the “over-inflated price” of Nor-Quest shares would “result in a devastating dilution of Northair’s shareholder equity in the Willa as well as our other projects.” Mr Carson believes the offer to be fair but doesn’t rule out any changes. Nor-Quest wants full control but he confirms they intend to “accept all shares tendered.”

The old HB mill is located about 50 mi from Northair’s Willa project and he says that Kilborn Engineering (B.C.) estimates it will cost $540,000 to reactivate the facility.

Negotiations are under way with other property owners in the Salmo area who might be interested in supplying feed on a custom milling basis. He claims the economics are there for shipping ore to the plant from Willa.

Mr Carson also says that Nor- Quest’s Gladiator-Fairview mine 60 mi north of Phoenix, Ariz., has been operating on an “intermittent” basis for six months. Attracting quality underground miners has been a problem, he admits, noting that M. P. Dickson, who in the past was vice president operations for Northair, is now looking after the project.