Share swap offer for Altoro

In an attempt to diversify its exploration portfolio, Denver-based Solitario Resources (SLT-T) has tabled a friendly takeover bid for junior Altoro Gold (ATG-V).

The share swap offer would see Altoro shareholders receive one Solitario share for every three Altoro shares. This reflects a value of 53 per Altoro share — a 40% premium on the junior’s July 11 closing price of 38. The deal also includes the swap of company warrants at the same 3-for-1 ratio. If all the Altoro shares and options are exchanged, Solitario will issue 6.2 million shares, raising the total number of outstanding shares to 23 million. If all the warrants are exchanged, Solitario will issue 825,242 warrants.

“This is a good fit for both companies,” says Christopher Herald, Solitario’s chief executive officer. “After the acquisition, Solitario will be well-diversified on both a commodity and a geographic basis.”

Altoro’s two main shareholders, representing 30% of the shares, have agreed to the offer. Completion of the deal is subject to 66.67% of Altoro shares being tendered. The offer is expected to close by the end of August.

“Solitario’s strong cash position allows the combined company to advance its 100%-owned projects,” said Altoro President David O’Connor.

With US$7.3 million in cash, Solitario is eyeing Altoro’s various early-stage projects in South America. These include the Rincon del Tigre nickel sulphide property in Bolivia, as well as four gold properties and the Pedra Branca platinum-palladium property in Brazil.

Altoro’s 126,000-acre Pedra Branca property covers a favourable platinum-palladium-rhodium-bearing ultramafic complex. Previous drilling by Rio Tinto (RPT-N) and Gencor in the mid 1980s encountered potentially economic grades in several zones. Recently, a drill program by Altoro on the Esbarro zone expanded mineralization. Hunter-Dickinson-led Rockwell Ventures (rcw-v) stands to earn a 60% interest in the project by spending US$7 million on exploration and development over four years. Rockwell is also required to issue Altoro US$500,000 of its stock.

Altoro also holds a 100% interest in the 125,000-acre Rincon Del Tigre property in eastern Bolivia. Recent work has defined a strong 20-km-long platinum group metal anomaly. In 1982, Rio Tinto drilled two holes, 4 km apart, on the anomaly. The holes intersected 10 metres averaging 1.3 grams platinum and palladium per tonne in one hole and 8 metres grading 1.2 grams platinum and palladium in the other.

In June, Altoro entered into an option agreement with Mitchell River Exploration on three of its Brazilian gold projects. Mitchell River has committed to spend a minimum of US$2 million per year on the three properties until it has completed 23,500 metres of combined drilling to earn between a 60 and 80% interest in the properties.

Solitario’s main assets are the Bongara zinc project, the Sapalache gold property and a carried royalty position on the Yanacocha gold property, all of which are in Peru. Solitario is a 57.2%-owned subsidiary of Crown Resources (CRO-T).