Malartic Hygrade, crown battle for control of Gold Texas

Malartic currently holds a 19.9% interest in Gold Texas, which in turn holds as its key asset a 15% stake in a Washington gold project being brought into production by Echo Bay Mines (TSE).

If its offer is successful, Malartic said it intends to make a subsequent follow-up offer for the balance of Gold Texas common shares “at an equivalent per share consideration to consist of cash, common shares of Malartic, or both.”

Complicating matters for Malartic, however, is Crown Resources (NASDAQ), which is proceeding with its own previously announced tender offer for shares of Gold Texas. The company said the offer was accepted by shareholders “holding slightly more than 65% of the outstanding Gold Texas shares.”

The company also noted that the B.C. and Ontario Securities Commissions rejected protests by Malartic against its tender offer.

Crown Resources is a new entity resulting from the reorganization of several associated companies, including one which also holds a 15% interest in the Kettle River gold project. By making all the companies wholly-owned subsidiaries, Crown Resources will have a consolidated 30% interest in the project which has reserves of 3.9 million tons of ore at an average grade of 0.189 oz gold per ton, in addition to a large U.S. property portfolio.

Paul Jones, president of Crown, said the Malartic offer “is of extremely dubious value to Gold Texas shareholders as it is highly unlikely Malartic could acquire 50.1% due to the response to Crown’s bid, and since the announced cash bid is only slightly above the current market value of Gold Texas shares.”

Crown is offering 1.43 Crown shares for each Gold Texas share. Malartic’s offer will expire at the end of March, three days prior to the withdrawal rights deadline for eligible Gold Texas shareholders.

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