Gold major Cambior (CBJ-T) has unveiled a friendly offer to acquire all the outstanding shares of industrial-minerals miner Sequoia Minerals (SEQ-T), its equal partner at the Niobec niobium mine in Quebec’s Lac St. Jean region.
Under the agreement, Sequoia shareholders will receive one Cambior share for each 6.3 Sequoia shares. This represents a price of 60 for each Sequoia share based on the closing price of both companies’ shares on April 19 — or a 27.7% premium on the average closing price of Sequoia during the last 20 trading days.
Since Sequoia has 108.1 million fully diluted shares, Cambior will wind up issuing 17.2 million shares to complete the merger.
Sequoia shareholders must vote on Cambior’s proposal before July, and the deal also provides for a $2-million break-up fee should Sequoia terminate the proposed merger to accept a better offer.
Jacques Bonneau, Sequoia’s president and CEO, has stated that his shareholders will benefit from Cambior’s market-share liquidity and growth potential.
Last December, Quebec City-based Mazarin (MAZ-T) spun off its niobium, dolomite and graphite assets into newly formed Sequoia Minerals, leaving only the troubled chrysotile-asbestos assets under the Mazarin banner.
Sequoia’s flagship asset is its half stake in the 3,400-tonne-per-day underground Niobec mine, where Sequoia acts as operator and Cambior as marketer of the niobium produced. Sequoia bought its interest in the 17-year-old mine from Teck Cominco in 2001.
Niobec is the only niobium producer in North America and the third-largest in the world, and its sales last year totalled US$44.4 million.
Sequoia’s dolomite assets are held by the wholly owned subsidiary Dolomex, which mines a high-purity dolomite deposit near Portage-du-Fort, 100 km west of Ottawa.
The company’s embryonic graphite business centres around the Lac Knife graphite deposit, near Fermont, Que. There, Sequoia is partnered with U.S.-based Graftech International (GTI-N), which specializes in manufacturing graphite products for fuel-cell applications. The partners have completed a feasibility study of the deposit but are awaiting commercial development of fuel-cell technology.
In January 2004, Sequoia added to its industrial-minerals portfolio by acquiring a 100% ownership in a wollastonite (a calcium silicate) property, situated 100 km northwest of Chicoutimi, Que., that once belonged to the failed junior miner Orleans Resources.
Discovered in the early 1990s and briefly brought into production later that decade, the deposit contains 20 million tonnes grading 36.6% wollastonite.
Last year, Sequoia lost $0.6 million (1 per share) on revenues of $38.8 million, compared with a loss of $4.7 million (10) on $42 million in revenue a year earlier.
Sequoia attributed much of the revenue decline to the slowdown in the North American steel industry in the first half of the year and a loss of a dolomite-product customer, who later returned.