Marathon bids for Discovery PGM (February 19, 2008)

Vancouver – In the midst of completing a feasibility study on its namesake project, Marathon PGM (MAR-T) has made a takeover offer for Discovery PGM (PTD-V) in order to add the junior’s nearby Geordie Lake deposit to the Marathon project.

Phillip Walford, president and CEO of Marathon, and John McGoran, president and CEO of Discovery, agree the acquisition would be good for both companies. For Marathon it would significantly and conveniently add to the company’s resource levels. For Discovery it is perhaps the best way to “expeditiously advance” Geordie Lake, as McGoran puts it.

The bid offers 0.0794 of a Marathon share for each Discovery share. Based on the $4.87 closing price for Marathon’s shares on Feb. 15, the offer values Discovery shares at 39 a piece and the company at roughly $11 million, on a fully diluted basis.

The Discovery board supports the takeover bid and its members have signed a lock-up agreement, ensuring 36% of Discovery’s shares support the move. To pass, the offer needs 66.6% support.

Discovery owns 100% of Geordie Lake, a 1,540-hectare property near Marathon, Ontario. The property is part of the Coldwell Complex, which also hosts the Marathon PGM-copper deposit. Management at Marathon believes the Geordie resources are amenable to processing at the Marathon PGM-Cu development site.

Geordie Lake hasn’t seen a resource estimate since early 2002. At that time, based on considerably lower metal prices, indicated resources stood at 24.4 million tonnes grading 0.537 gram palladium per tonne, 0.03 gram platinum per tonne, 0.04 gram gold per tonne, 0.326% copper, and 2.52 grams silver per tonne, based on a $10 per tonne net smelter return cut-off. Inferred resources added 5.4 million tonnes grading 0.626 gram palladium, 0.04 gram platinum, 0.05 gram gold, 0.36% copper, and 3.04 grams silver.

In an interesting twist, Marathon’s vice president of exploration David Good worked on the Geordie Lake deposit in his PhD research program.

Discovery moved up 16 on news of the takeover offer to close at 32, just below its all-time high, and on record volume of 1.5 million shares traded. Discovery had a 52-week trading range of 9 to 19 and has 27.8 million shares issued. Marathon, conversely, fell 37 or 7.6% on the news to close at $4.50. The company has a 52-week trading range of $3.55 to $8.40 and has 21.8 million shares issued.