Taking a big step into the gold sector, North American Palladium (PDL-T, PAL-X) has launched a friendly all-share deal for Cadiscor Resources (CAO-V), owner of the dormant Sleeping Giant gold mine in Quebec.
The idled palladium miner is offering Cadiscor shareholders 0.33 of a Palladium share for each Cadiscor shares, for 14.3 million new Palladium shares, or a 14% stake in Palladium.
Based on the $1.78 closing price of Palladium on the TSX on March 31, the deal values Cadiscor at $25.5 million, or $0.59 per share, a 47% premium to its closing price, and a 75% premium to its 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, with a view to grow Palladium to a mid-tier precious metal producer.
He added that Palladium’s mining expertise gained from operating its now-suspended Lac des les palladium mine near Thunder Bay, Ont., 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 that Palladium’s cash and knowhow would help restart Sleeping Giant this year.
For the takeover to go ahead, two thirds of Cadiscor’s shareholders must vote in favour during 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 unanimously recommending approval.
Palladium has also bought from Cadiscor a $5.4-million 12% debenture, maturing in 18 months, which is convertible to Cadiscor shares at 50¢. 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.
Cash-poor Cadiscor is on the rebound from February’s proposed but quickly scuttled friendly merger of equals with Tiomin Resources (TIO-T, TMIRF-O).