Quadra Mining eyeing “moly” production in Greenland

Vancouver Eyeing molybdenum production in Greenland, Quadra Mining (QUA-T) is launching a $34 million takeover bid for International Molybdenum (IMY-L), after securing irrevocable backing from the English juniors largest shareholder.

As Quadra is already producing copper and gold in Nevada, the Vancouver company is aiming for diversification by capturing InterMolys Malmjberg molybdenum project in Greenland.

With an estimated resource of 212 million tonnes, grading 0.12% molybdenum [560 million pounds measured and indicated], it is one of the more significant, advanced stage molybdenum projects on the market, according to Quadra.

Quadra said a technical report prepared for InterMoly sees the development of a 25,000 tonnes-per-day open pit at the site, operating 365 days-per-year at a scale of 25,000 tonnes per day.

Processing of the ore would be by standard flotation procedures, producing 15,000 to 20,000 tonnes of molybdenite concentrate annually.

Its a very large project and it will cost lots of money to develop it, said InteMoly chief executive officer Morris Beattie, during an interview with The Northern Miner.

Malmjberg has become available because InterMoly began shopping the project around after finding itself unable to finance a bankable feasibility study.

In our minds this is a very significant resource in terms of tonnes and grade, said Quadra chief executive officer Paul Blythe during a conference call with analysts to discuss the deal.

Under the terms of the bid, InterMoly shareholders will receive one Quadra share for each 36.22 shares of the AIM-listed junior. Holders of InterMoly warrants will receive one share of Quadra for each 99.23 warrants they hold now.

The offer values the combined shares and warrants of InterMoly at $34.4 million, based on $8.79, the closing price of Quadra shares on March 28, 2007. Valuations are also based on 10.68 pence per InterMoly share or 3.9 pence per InterMoly warrant.

That marks a 78% premium over the price of InterMoly shares on March 6, 2007, the last day of trading before a surge in the price of the stock, leading to an announcement 48 hours later that preliminary discussions regarding a possible offer had begun.

News of the offer sent Quadras stock price rising $1.19 to $10.29 to in Toronto, March 30, the day the terms of the bid were announced.

On the London Stock Exchanges AIM market, InterMoly shares closed at 14.25 pence, down 5.88 pence

Quadra is launching the bid following a surge in moly prices, which Mr. Blythe attributed to a lack of investment in new primary capacity due to a slump in prices during the last two decades.

Mainly used as an alloying element in the production of iron and steel, molybdenum is selling for US$30 a pound, an increase from US$5 in 2004. Forecasts by analysts that prices could continue to rise, are tied to potential demand from the Chinese stainless steel sector and the oil and gas pipeline industry.

We believe in a strong, sustained molybdenum price going forward, Mr. Blythe said.

The bid is being launched after Quadra received an irrevocable undertaking” that Galahad Gold will accept its offer. Gahalhad, holds 78% of InterMolys shares outstanding and 25% of the warrants.

This irrevocable undertaking will continue to be binding even in the event of a competing offer being made for InterMoly, said InterMoly in announcing the deal to AIM.

Based on the advice of Matrix Corporate Capital, the InterMoly directors consider the offer to be fair and reasonable, and have agreed to recommend it to the companys shareholders and warrant owners.

We are pleased to have secured this agreement with Quadra as it will provide the funding to allow the Malmbjerg project to be develop towards production, said Beattie.

By accepting the deal, he said InterMoly shareholders can participate in Quadras other assets, including 125 million pounds of copper and 65,000 oz. gold from the Robinson mine in Nevada.

The offer is subject to a number of conditions, including approval by both the Toronto Stock Exchange, and Greenland government, as well as 90% of the holders of shares and warrants of InterMoly.