September 14, 2011 / 11:24 AM / 6 years ago

UPDATE 2-Hathor board asks shareholders to reject Cameco offer

* Says offer financially inadequate

* Cameco bid fails to recognize quality of Roughrider deposit

* Says Cameco failed to ascribe value to other non-Roughrider assets

* Hathor pursuing alternatives to Cameco bid, says other offers may emerge (Adds CEO comments, details on Roughrider, shares)

Sept 14 (Reuters) - Hathor Exploration said its board asked shareholders to reject the C$520 million hostile takeover bid by Cameco Corp , Canada’s No 1 uranium producer, as the offer substantially undervalues quality of its Roughrider deposit.

Cameco launched its bid for the junior uranium company in end-August, after talks for a friendly deal failed.

At stake is Hathor’s Roughrider deposit, a uranium project located near Cameco’s Rabbit Lake mill in the Athabasca basin of the western Canadian province of Saskatchewan.

Hathor said Cameco’s C$3.75 a share offer was financially inadequate and failed to ascribe value to its other non-Roughrider assets, including its Russell Lake property in the south-eastern Athabasca basin.

“The fact that our shares have been consistently trading well above the offer price indicates that the market in general views this bid as inadequate,” said Chief Executive Michael Gunning.

Hathor shares, which have gained about 55 percent since the Cameco offer on Aug. 26, closed at C$4.17 on Tuesday on the Toronto Stock Exchange.

The company dubbed the Cameco offer, which is open until Oct. 31, predatory and opportunistic. None of its directors or officers intends to tender their shares.

Other offers or alternatives may emerge, Vancouver-based Hathor said.

On Tuesday, Hathor released a preliminary economic assessment (PEA) for Roughrider and said it would potentially be one of the lowest cost uranium producers in the world.

Cameco, however, played down the mine study, saying the key assumptions in the PEA were unrealistic and it did not contain any new information that would make Cameco sweeten its bid.

Cameco’s move is aimed at expanding its output from the Athabasca basin mining region in Western Canada. The company operates mines in Canada, the United States and Kazakhstan. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Sriraj Kalluvila)

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