Dispute triggered Mantle takeover bid for Ecstall

Vancouver – Mantle Resources (MTS-V, MTSZF-O) says its takeover bid for Ecstall Mining (EAM-V, ESMGF-O) was triggered in part by dispute over exploration spending at a northeastern British Columbia lead-zinc project.

The admission comes after Ecstall issued a statement on January 8 telling shareholders not to tender to Mantle, which is offering 0.4 of a share for each share of Ecstall. The offer aims to consolidate the interests of both companies in the Akie lead-zinc property, which is located 280 kilometres north of Mackenzie, B.C.

Under an exploration agreement, Mantle says it has the right to earn a 65% stake in the Akie property from Ecstall by spending $4 million on exploration and delivering $450,000 in cash payments.

Ecstall, in turn, has a 40% project stake and an option-to-purchase agreement with Inmet Mining (IMN-T, IEMMF-O) to acquire the remaining 60 per cent for $475,000.

However, last October Ecstall said a dispute has arisen over the extent to which expenditures incurred by Mantle qualify as “expenditures” for the purposes of Mantle earning its 65% property interest

Based on information reviewed to date, Ecstall expressed the concern that Mantle has not incurred expenditures which qualify under the option agreement to permit Mantle to earn its interest in the property.

Ecstall did not elaborate on this statement and the company’s President Chris Graf could not be reached for comment by The Northern Miner.

In an interview, Mantle President Peeyush Varshney said consolidation of the project interest remains the prime motivator in his firm’s decision to launch the takeover bid.Mantle has the backing of Lundin Mining (LUN-T, LMC-X), which holds a 10% stake in Vancouver-based junior.

However, he said Mantle is also concerned that exploration on the property will be delayed if the dispute gets tied up in a lengthy arbitration process. Even if the dispute gets resolved to the satisfaction of both parties, Mr. Varshney said both companies will still have sit down and hammer out a joint venture agreement.

“We have no confidence that this can be done in short order,” he said.Mantle insists that it has spent a total of $4.75 million in qualified expenditures on Akie, well in excess of the amount required. It is challenging Ecstall to conduct an audit if there is any doubt about what has been spent so far.

After reviewing an Ecstall directors’ circular, which describes the Mantle offer as “inadequate from a financial point of view,” Mr. Varshney reiterated his view that it offers no concrete rationale for making that determination.

Three weeks ago, Mantle valued its offer at 47 cents a share based on the closing price of both companies shares on the TSX Venture Exchange on Dec. 15.

On Jan. 15, Ecstall shares fell 2 cents to 38 cents. Mantle rose 4 cents to $1.10.

Mantle says its offer is due to expire on Jan. 29, 2007 unless it is extended.

As the Northern Miner reported on Dec. 18, Mantle has turned in a number of significant high grade intersections at Akie since drilling commenced in late 2005. In 1995, the major calculated a non_N143-101 complaint inferred resource (based on only four widely spaced holes) of 13 million tonnes, grading 8.5% zinc, 1.5% lead, and 13.2 grams of silver over an average true thickness of 6.3 metres.


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