Bacanora Minerals Ltd. has knocked back an all-scrip takeover offer from Rare Earth Minerals Plc that values the Canadian lithium explorer at between £103.4 million and £107.9 million.
The London Stock Exchange-listed company has a market capitalization of about £95.5 million based on shares on issue of 107,874,353 and its last closing price of 88.5 pence.
However, interim nonexecutive Chairman James Leahy said Sept. 30 that Rare Earth Minerals’ offer is “opportunistic and materially undervalues” the Sonora lithium project in Mexico.
Rare Earth Minerals, which already owns a 19.8% stake in Bacanora, is offering between 135 and 141 of its own shares for every Bacanora share held, which equates to between 95.85 pence and £1.00 per share.
Bacanora’s directors believe the takeover has the potential to jeopardize the Sonora project's development going forward.
The company also argues that the offer would result in dilution of the near-term and life-of-mine cash flow for shareholders, given that 83.6% of the Sonora plant feed is expected to originate from Bacanora's 100%-owned La Ventana concession over the current 21-year life of mine.
Another sore point for Bacanora was Rare Earth Minerals’ vote against the company’s plans to redomicile to the UK at a Sept. 28 general meeting.
The move was to be done via a plan of arrangement under which shares in Bacanora would be exchanged for ordinary shares in Bacanora Lithium Plc, a U.K.-established company.
Bacanora is on track to release a bankable feasibility study on the Sonora project in the first quarter of 2017.