Canada-based Baffinland Iron Mines Wednesday announced that it has received a C$274 million all-cash takeover offer from a newly-established unit of private investment firm Energy & Minerals Group as a way to gain access to Baffinland's Mary River iron ore project in Nunavut.
The unit, Nunavut Iron Ore, which already holds a 15.3 percent stake in Baffinland, has offered the company $0.80 per share, representing a 43 percent premium to Tuesday's closing price of $0.56.
"Through our offer, Baffinland shareholders have an opportunity to receive an immediate and substantial all-cash premium for their investment and eliminate the inherent risks in a company at Baffinland's stage of development," said chairman of Nunavut Iron Ore, Bruce Walter.
Nunavut Iron Ore has assured that it will expedite development of the Mary River property once the acquisition of Baffinland is successful, saying it will avoid further dilution by eliminating the need for equity financing, joint venture or any other transaction.
The Mary River project has reserves of about 365 million metric tons (mt) of ore, grading an average of 65 percent iron, and about 500 million mt of ore resources.
Baffinland has been looking for partners for the C$4 billion project for some months now, which is expected to produce 18 million mt per year.
The proposal, which is fully financed, expires on October 28, 2010.
Energy & Minerals Group, a US-based investment firm, manages over US$2 billion in investments in the energy and minerals sector.