Baffinland in play

The week before the Christmas break was a busy one in the capital markets, with plenty of mergers and acquisitions and a plethora of financings in the junior mining sector.

• The battle has heated up for ownership of Toronto-based Baffinland Iron Mines and its prized Mary River iron ore deposit in northern Baffin Island — arguably the finest undeveloped iron ore deposit in the world owing to its extremely high-quality ore and large size.

Privately held, U.S.-backed Nunavut Iron Ore Acquisition — which was newly created just for this takeover attempt — is firing off hostile bids to beat out rival friendly bidder, steel giant ArcelorMittal. Baffinland, meanwhile, is trying to place obstacles in Nunavut Iron Ore’s path in the form of shareholder rights plans that the Ontario Securities Commission keeps knocking down.

At presstime, Nunavut Iron Ore’s bid was the highest, with an offer of $1.35 per share, valuing Baffinland at $531 million. The offer only requires that 50.1% of the diluted shares are tendered, and it expires Dec. 30.

ArcelorMittal’s latest bid, set to expire Dec. 29, was for $1.25 per share, valuing the company at $492 million.

Nunavut Iron Ore kicked off the auction in September with a hostile 80¢ per-share-offer. A month earlier, Baffinland’s shares were trading around 40¢, and at presstime they were trading slightly below the latest highest offer, indicating things may be coming to an end soon.

However, Baffinland’s recently departed CEO Gordon McCreary, who owns 2.4% of the company, rides the dark horse. He’s loudly against both competing offers, and told Reuters he’s trying to get a Chinese company to table a superior bid.

• Still under repair after the past few years’ wild boom and bust, the uranium subsector is starting to show signs of life again, helped along by a U3O8 spot price that’s risen from US$42 in July to US$62.50 in mid-December.

Russian-controlled ARMZ tabled a highly elaborate all-cash A$8- per-share offer for Toronto-listed Mantra Resources, a modest premium to recent trading that values the Aussie uranium junior at A$1.16 billion. However, the offer equates to a relatively rich US$10.26 per lb. U3O8 resource for its Mkuju River uranium project in southern Tanzania. But that’s not all: Mantra will ultimately end up in the hands of Uranium One under a side deal struck with ARMZ, which had the cash on hand that Uranium One didn’t to scoop up Mantra.

Here in Canada, another offshore company, Australia’s Paladin Energy, is taking a bullish long-term view on uranium and has made a deal to acquire Fronteer Gold’s uranium assets in Labrador, held under the Aurora Energy Resources name, for $261 million in shares, or about US$1.90 per lb. U3O8 in the ground. The hitch is that there has been a locally instigated moratorium on uranium mining where the Aurora assets are located. But Paladin is obviously betting that the anti-uranium sentiment in the area can be overcome once local officials get more experience dealing with uranium, and see potential for overall positive local benefits.

To underscore the rosy outlook for uranium miners, industry leader Cameco announced early in December that it is raising its annual cash dividend to 40¢ from 28¢ per share, or a 43% boost, beginning in 2011. This will be the seventh time Cameco has increased its dividend in nine years.

• Newbie gold miners celebrated a couple of first gold pours.

In Turkey, Anatolia Minerals Development has triumphed after years of tough slogging and poured gold at its new pler heap- leach gold mine, with production expected to ramp up to 80% of nameplate capacity of 175,000 oz. gold annually by mid-2011.

On a smaller scale in northwest Mexico’s Sonoro state, NWM Mining poured its first gold-silver dor button at its new Lluvia- Jojoba heap-leach mine. Much of NWM efforts in the past year have been to expand the resource potential of the Lluvia-Jojoba property.

• In another significant coming-of-age, Moly Mines shipped its first iron ore from its Spinifex Ridge complex in Western Australia, with ore due to be loaded into the ocean-going MV Father Neptune in late December. Moly Mines says this maiden shipment will carry up to 55,000 tonnes of iron ore fines at a forecast grade of 59% iron. It adds that shipment sizes will increase in the coming months as the mine production rate ramps up and commissioning of the company’s stockpiling facilities at Utah Point is completed. The Spinifex Ridge property is best known for its separate world-class molybdenum-copper deposit, which Moly Mines is developing in partnership with major shareholder Hanlong Mining Investment of China.

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