Southwestern Resources says Hochschild's $22.5M takeover deal will go ahead
Thu May 21, 3:17 PM
Kristine Owram, The Canadian Press
ca.news.finance.yahoo.com
By Kristine Owram, The Canadian Press
TORONTO - Southwestern Resources Corp. (TSX: SWG.TO) says London-based Hochschild Mining PLC is closing its $22.5 million planned takeover of the Vancouver miner, half a day after it looked like the transaction could collapse because of a last-minute snag.
The move, announced Thursday, came about 14 hours after Southwestern stated in an earlier news release that Hochschild had failed to complete the transaction over concerns about the sale of Southwestern's former troubled Boka project in China.
But "based on discussions and actions that have taken place since the company's press release of yesterday's date, Hochschild will close the transaction contemplated under the arrangement agreement between the company and Hochschild dated March 23," Southwestern said in a release.
"Accordingly, the parties anticipate that the transaction will close today."
Southwestern chairman David Black said his company knew Hochschild's concerns were unfounded.
"It was an alleged misrepresentation which we maintain didn't have any merit, but Hochschild just wanted to be comfortable with that," Black said Thursday. He declined to go into further detail, saying the issue was "not material."
On Wednesday night, Southwestern said Hochschild had decided to back away from the deal after documents were released concerning the sale of the Boka project. The purchaser, Hong Kong East China Non-Ferrous International Mineral Development Co., had alleged "certain misrepresentations" related to the sale.
In the earlier statement, Southwestern described the reasons for the deal's cancellation as "without merit" and "unfounded." The company said it was investigating its options, including continuing talks with Hochschild, a miner with extensive operations in Latin America.
If the Hochschild agreement had collapsed, it would have been the second failed merger for Southwestern. In March, Geoinformatics Exploration Inc. (TSXV: GXL.V) terminated an agreement for a merger of equals worth about $11 million. It did not give a reason for the cancellation.
Southwestern had been hit by shareholder lawsuits after problems with xploration results at its Chinese properties, including Boka. Last year, an Ontario judge approved a $15.5-million settlement of an investor class-action lawsuit against the company.
The suit was filed after Southwestern announced in July 2007 what were initially described as assay errors at Boka, sending the company's stock plunging.
Southwestern then announced in August 2007 that the mineral resources at the project were significantly smaller than previously reported and it sued former chief executive John Paterson.
Southwestern is now focused on its Peruvian joint-venture projects, including the Millo gold-silver project with Yamana Gold Inc. (TSX: YRI.TO) and the 50-per-cent owned Liam gold-silver joint venture with Hochschild.
In Thursday trading on the TSX, Southwestern shares were up half a cent to 50 cents. On the London Stock Exchange, Hochschild shares fell 28 cents to US$3.22.
Hochschild is a leading gold and silver producer which operates five underground mines - four in southern Peru and one in southern Argentina - and one open-pit mine in northern Mexico.
Hochschild also has one early-stage development project in Mexico and 15 longer-term prospects throughout Latin America. |
