June 30, 2009 / 1:16 PM / 9 years ago

UPDATE 1-Klondex Mines rejects SilverCorp's hostile bid

* Klondex rejects Silvercorp bid

* Says offer significantly undervalues the company

* Closes private placement of 1.7 million shares

TORONTO, June 30 (Reuters) - Canadian gold exploration company Klondex Mines Ltd (KDX.TO) said on Tuesday its board has recommended that its shareholders reject the unsolicited takeover bid from Silvercorp Metals Inc (SVM.TO).

Earlier this month, Canada’s Silvercorp Metals launched an unsolicited, all-stock bid for Klondex in an attempt to expand its portfolio and increase its geographic diversification.

The offer calls for the exchange of 0.5 common share of Vancouver, British Columbia-based Silvercorp for each Klondex common share. Based on Monday’s close, it values Klondex at C$2.12 per share, or about C$68 million.

Klondex said its directors and officers will neither accept the Silvercorp offer nor tender their shares to the Silvercorp offer. Klondex’s management exercise control over almost 20 percent of the company’s shares on a fully diluted basis.

The Klondex board said Silvercorp’s offer significantly undervalues Klondex’s assets. The company also said it was pursuing alternative transactions.

The company also said it has completed a private placement of 1.7 million shares of common stock at C$1.75 per share to China Mineral United Management Ltd. The placement will yield gross proceeds of C$3.0 million.

Klondex said proceeds of this financing, combined with the C$1 million generated from its recent stock option and warrant exercises, will fund the company’s near-term operations. (Reporting by Euan Rocha, editing by Maureen Bavdek)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below