Anaconda withdraws takeover bid for Maritime

Anaconda Mining (TSX: ANX; US-OTC: ANXGF) has withdrawn its hostile takeover bid for Maritime Resources (TSXV: MAE; US-OTC: MRTMF) after Maritime’s recently completed, $1.5-million private placement. It ends Anaconda’s five-month-long pursuit of Maritime.

Anaconda launched its hostile bid in April. It says it was unable to engage Maritime management on friendly terms after submitting a takeover proposal in January.

Maritime countered, saying it was “disappointed with Anaconda’s tactics” and had “expressed consistent willingness to consider Anaconda’s unsolicited approach.”

“We were offering a premium of around 16¢, and we didn’t want to approve or condone their defensive tactic,” Anaconda president and CEO Dustin Angelo says in an interview with The Northern Miner.

“They were diluting their own shareholders, and we decided it was time to let it go, because we couldn’t see getting a deal done.”

Earlier, Anaconda proposed increasing its offer 28% to 21¢ per Maritime share. Shares of Maritime are now valued at 8¢, within a 52-week range of 8¢ to 14¢.

Maritime received 52% shareholder consent for the private placement. It later said most of its shareholders disagree that the private placement was a defensive tactic.

Maritime’s flagship asset, the past-producing Hammerdown gold project, is located 100 km south of Anaconda’s Pine Cove mill in Newfoundland’s Baie Verte peninsula.

The project contains 727,500 measured and indicated tonnes grading 11.59 grams gold per tonne for 271,100 oz. gold, as well as 1.76 million inferred tonnes grading 7.68 grams gold for 436,000 oz. gold.

A gold pour at Maritime Resources’ Green Bay gold property in Newfoundland and Labrador. Credit: Maritime Resources.

The company recently drilled 1,700 metres at Hammerdown. The campaign tested near-surface potential at the project, and Maritime will try to develop an open-pit resource.

Maritime received its final permit to dewater the underground workings at Hammerdown in March. The company could drill again after it dewaters the underground ramps, focusing on upgrading the inferred resource to the measured and indicated categories.

Maritime also has its Orion gold deposit, 1.5 km south of Hammerdown. Orion contains 1.09 million indicated tonnes grading 4.47 grams gold for 157,500 oz. gold and 1.28 million inferred tonnes at 5.44 grams gold for 225,100 oz. gold.

“It has always been contemplated that Maritime’s mine would use a third-party mill,” Angelo says. “And they have an underground resource that would be significant feed to our mill over and above what we’re already producing.”

Angelo says Anaconda has been looking for assets to acquire in Atlantic Canada for the last three years — and will continue to look. The company is after projects that have a National Instrument 43-101 compliant resource and are near development.

“If we can leverage our own infrastructure, that would be an added bonus,” Angelo says.

While trying to acquire Maritime, Anaconda finished mining its Pine Cove pit and began transitioning to its Stog’er Tight West pit. It produced 32,833 tonnes from Stog’er Tight during ramp up in this year’s second quarter, but expects the number to rise in the third and fourth quarters. It has turned Pine Cove into an in-pit tailings storage facility with a 15-year capacity based on a 1,350-tonne-per-day throughput rate. Anaconda has operated between 1,200 tonnes per day and 1,400 tonnes per day for the past year.

An aerial view of Anaconda’s Goldboro gold project in Nova Scotia. Credit: Anaconda Mining.

Anaconda produced 4,632 oz. gold during 2018’s second quarter — a 4.4% increase over the same period last year. In the first half of 2018, it produced 8,925 oz. gold — an 8.7% increase over the comparative period in 2017. It sold 4,330 oz. gold in the second quarter.

Anaconda’s grade fell during the second quarter to 1.38 grams gold from 1.49 grams gold, compared to the second quarter of the previous year, which it says owes to mill throughput coming from stockpiled Pine Cove ore. It expects higher grade in the second half of 2018, when it sources ore from Stog’er Tight.

The company also did a $4.5-million private placement in June that it says it will use to continue drilling. It intends to resume drilling its Goldboro gold project in Nova Scotia in “the next couple weeks.” The 15,000-metre campaign will include a combination of infill and step-out drilling, as the company moves toward a feasibility study in mid-2019.

The company is still releasing results from the nearly 12,000-metre Goldboro drill campaign it started last October. Highlights include 3.64 grams over 1 metre from 34.9 metres downhole, 29.59 grams over 0.5 metre from 421.8 metres downhole and 4.82 grams over 3.6 metres from 384.7 metres downhole.

The company is expanding the deposit in all directions. It has intersected wide mineralization zones that span a 100-metre strike distance.

“If we can continue to chase it down and it exists further east and west, it potentially could change the economics and the profile of the deposit,” Angelo says.

Shares of Anaconda are trading at 35¢ with a 52-week range of 22¢ to 56¢. The company has a $41-million market capitalization.

Maritime has a $7-million market capitalization.