North American Palladium (PDL-T, PAL-X) is taking over Cadiscor Resources (CAO-V) in a friendly all-share deal which will see each Cadiscor share exchanged for 0.33 of a Palladium share, for 14.3 million new Palladium shares, a 14% stake in Palladium.
Based on the $1.78 closing price of Palladium on the TSX on March 31, the deal values Cadiscor shares at $0.59 apiece, a 47% premium to their closing price, and a 75% premium to their 20-day weighted average price.
William Biggar, Palladium’s president and CEO, said in a joint release that the acquisition would add a gold resource to the company’s palladium resource, and that the company’s acquisition focus is gold, in order to grow Palladium to a mid-tier precious metal producer.
He added that Palladium’s mining expertise would help bring Cadiscor’s Sleeping Giant gold mine in Quebec to production speedily, and also advance Cadiscor’s Discovery exploration project. This sentiment was echoed by Michel Bouchard, Cadiscor’s president and CEO, who said in the release that Palladium’s cash and know-how would help restart Sleeping Giant this year.
For the takeover to go ahead, two thirds of Cadiscor’s shareholders must vote in favour in a special meeting in May. Holders of Cadiscor options, warrants and convertible debentures can also exercise their securities for Palladium shares. The Cadiscor board is recommending acceptance of the offer, and the directors intend to vote their shares in favour.
Palladium has also bought from Cadiscor a $5.4 million, 12% debenture, maturing in 18 months, which is convertible to Cadiscor shares at 50¢ apiece. If converted in full, the shares would constitute a 19.9% stake in Cadiscor. In addition, it has bought from Cadiscor a $2.1 million, 12% debenture, also maturing in 18 months. Cadiscor will use the money to bring Sleeping Giant to production.