Falconbridge to absorb Novicourt

Facing consolidation itself, Falconbridge (FAL.LV-T, FAL-N) plans to snap up the shares in exploration partner Novicourt (NOV-T, NOVFF-O) it does not already own.

The major is offering Novicourt shareholders $2.30 in cash for each share tendered, to give the deal a total value of around $17.5 million. The offer represents an 11.6% premium to Novicourt’s average closing share price over the past 90 days.

Falco currently holds a 62.1% stake in Novicourt. The offer is conditional on at least half the remaining shares in Novicourt being tendered.

Novicourt’s board has appointed a special committee of independent directors to review the offer, with the backing of independent legal and financial advisers. The review will include a formal valuation of Novicourt; Falco says its offer amounts to a 21.1% premium to the present estimated net asset value of Novicourt.

If successful, Falco plans to delist Novicourt.

Falconbridge and Inco (N-T, N-N) are still waiting for regulatory approval in the U.S. and Europe to complete their mega-merger. Inco recently extended its $12.8-billion bid for Falco by four months to the end of June. The extension is designed to give competition authorities more time to pore over reams of documentation. The European Commission recently began a second-phase review of Inco’s plan. The review could take up to 90 business days.

Both regulators are concerned about the position the combined entity would have in the high-grade nickel market. Such nickel is used in superalloys, which are employed in high-tech products like the rotating parts of jet engines, and in the nickel-plating market.

Nova Esperana

Meanwhile, a 9-hole, 2,300-metre drilling program by Novicourt and Falco recently cut copper-gold mineralization in three targets on the Nova Esperana property in Para state, Brazil.

Four holes on the Nova Esperana target, a 1.7-km-long geochemical anomaly in soils, cut mineralized core lengths of 7 to 18 metres, assumed to represent true widths of 5 to 14 metres based on dips seen in field mapping. Samples graded 0.2% to 0.42% copper, with trace gold credits.

At the Sao Jorge target south of Nova Esperana, four holes intersected grades of 0.1% to 0.2% copper, except in hole FSJ05-03, where a 22.1-metre intersection averaged 0.64% copper and a deeper 47.9-metre intersection averaged 0.55%. Both included higher-grade intervals.

A drill hole in the Uniao target, about 6 km west of Sao Jorge, cut a 7.6-metre interval grading 0.29% copper.

One other target, Morro Alto, remains to be tested, and Novicourt plans to do borehole electromagnetic surveys down the holes already drilled. Follow-up drilling is slated for Sao Jorge.

Novicourt lost $1.6 million (or 8 per share) during the last three months of 2005, compared with year-earlier earnings of $4 million (20 per share). The latest quarter saw no mine product sales, as the company’s sole producing asset, a 45% stake in the Louvicourt mine, closed in mid-July. In all, Novicourt earned $12.3 million or (61 per share) during 2005, off from $17.7 million (88 per share) in 2004. The company’s cash and equivalents position was more than halved at $37.8 million by year-end.

Shares in Novicourt shot up a quarter, or 11%, to a 52-week high of $2.55 in afternoon trading in Toronto following the news. Falconbridge was 37 better at $38.76; Inco was up 56 at $53.96.