Sulliden comments on Century offer
Tue Jan 15, 3:49 PM
ca.news.finance.yahoo.com
Directors' Circular and recommendation to be issued
TSX Symbol: SUE
TORONTO, Jan. 15 /CNW/ - Sulliden Exploration Inc. (TSX: SUE.TO) notes that in the Directors' Circular, issued December 13, 2007, relating to the Offer by Century Mining Corporation to purchase all of the shares of Sulliden on the basis of 0.72 of a Century share for each Sulliden share (the "Century Offer"), the Board of Directors of Sulliden urged Sulliden shareholders not to tender to the Century Offer until a further communication was made by the Directors. The Board advised shareholders that the Directors are considering recommending that shareholders reject the Century Offer but the Directors' Circular contained no recommendation of the Board as to whether Sulliden shareholders should accept or reject the Century Offer.
The Century offer consists entirely of Century shares and, if accepted, shareholders of Sulliden would become shareholders of Century. Accordingly, any evaluation of the Offer requires an assessment of Century itself and its prospects and of the value of Century's shares and the relative fairness of the Offer. The Board was of the view that further diligence was required in order to address the concerns of the Directors and to enable the Directors to make a determination as to whether or not the Century Offer is in the best interest of Sulliden shareholders.
As previously disclosed in the Directors' Circular, since Century first approached Sulliden in March 2007 to propose some transaction or business combination between Century and Sulliden, the Directors have had concerns about the financial condition of Century, about the technical assessment of Century's properties and about the agreements between Century and the Sanchez-Paredes family.
Since the date of the Directors' Circular the Board has been carrying out an assessment of Century and fairness of the Offer. The Board is concerned that there appears to be significant deficiencies in Century's financial and technical disclosure and has formed the opinion that there is not sufficient or adequate financial or technical information available in the Century Offer, or in Century's public disclosure, to enable a proper evaluation of Century.
For example, there is no proper technical disclosure, or there is only inadequate technical disclosure, in accordance with the standards prescribed by National Instrument 43-101, Standards of Disclosure for Mineral Projects, in relation to some or all of Century's mineral projects including the assets "acquired" in 2007. In fact, based on statements in Century's annual information form and the technical report filed by Century, it would appear that Century has no "reserves" at any property; no "resources" at its San Juan property; no technical report on the Rosario de Belen property, (both of which were referred to in the Century Offer) and, following the announcement by Century on November 5, 2007 that it is closing its Sigma mine, uncertainty with regard to the resources, if any, at Century's Lamaque mine.
Application to Securities Commissions:
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Accordingly on December 28, 2007 Sulliden made an application to the Ontario Securities Commission ("OSC") pursuant to Sections 104 and 127 of the Securities Act (Ontario) to compel Century to comply with the Securities Act and for an order, inter alia, that Century provide full, proper and accurate disclosure in the Century Offer of all material facts relevant to Century and to the Century Offer.
Century trading Sulliden Shares:
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In addition, in the same application to the OSC, Sulliden submitted that certain transactions in Sulliden's shares engaged in by Century, as disclosed in the Century Offer, were in breach of the Securities Act and have improperly and adversely affected the Sulliden share value.
In summary, based on the disclosure in the Century Offer, it appears that during the period August 16 to October 1, 2007 Century effected twenty different sale transactions, the first twelve of which appear to have been at progressively lower share prices, from $0.37 per Sulliden share on August 16th down to $0.27 per Sulliden share on September 21, 2007. It would also appear that Century sold these shares at a loss because during the period May 24, 2007 to August 15, 2007 Century had purchased an aggregate of 2,860,500 Sulliden shares at prices between $0.49 and $0.59 per Sulliden share. It appears that the sales commenced on August 16, 2007, the day immediately after Century had issued a press release on August 15th announcing that "Peruvian Court rules in Algamarca's favour" and, Century's intention to launch a hostile takeover bid for Sulliden's shares was announced on October 4, 2007, two days after Century completed the sale of a total of 268,000 shares of Sulliden.
Century has disclosed that on October 27, 2007, it repurchased 274,000 Sulliden shares at $0.24 per share, thus effectively recovering the loss it had made on the sales between August 16th and September 21, 2007. However, on the next two trading dates, being just three and four days before announcing its intention to make a takeover offer for Sulliden, Century again sold an aggregate 149,000 shares of Sulliden at prices between $0.31 and $0.28 per Sulliden share.
Sulliden alleges that Century's pattern of purchasing and then selling and then repurchasing and reselling Sulliden's shares had the effect of artificially reducing the value of Sulliden's shares from just over $0.50 per share on August 15, 2007 (the date of the Century press release announcing that the Peruvian Court had ruled in its favour) to just over $0.28 per share on October 1, 2007 and that such sales were in violation of Section 126(1) of the Securities Act. Sulliden also alleges that Century is in violation of Section 76(1) of the Securities Act for selling shares in Sulliden with the knowledge it intended to make a takeover bid in respect of Sulliden, and therefore while Century and its insiders were in a "special relationship" with Sulliden, as that terms is defined in Section 76(5) of the Securities Act.
Sulliden's application to the OSC has now been referred to the Authorité des Marchés Financiers of Quebec ("AMF") (formerly the Quebec Securities Commission). On January 10, 2008 the lawyers for Century wrote to the AMF on behalf of Century disputing Sulliden's allegations and denying that Century had engaged in any share transactions that have breached the Securities Act or improperly affected the Sulliden share value and denying that Century had failed to make requisite disclosure of any material information.
Nevertheless, Sulliden notes that on January 11, 2008 Century issued a press release announcing that it had received an updated NI 43-101 compliant reserve and resource report and technical study for the Lamaque underground mine. Sulliden further notes that the technical report has not been provided to Sulliden and apparently will not be filed on SEDAR for a period of 45 days. (See additional Information - Century press release January 11, 2008).
Accounting Experts Retained:
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In view of the Directors concerns about Century's financial condition and the adequacy of its financial disclosure, Sulliden has retained Rosen & Associates, litigation and investigative accountants, to undertake a review of the financial disclosure in the Century Offer and this report is expected within a few days.
Directors Circular to be Issued:
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Upon receipt and review of the expert Accountant's Report, and subject to any actions or advice that may be taken or given by the AMF or the OSC, the Board intends to issue a further communication and recommendation (Notice of Change of Directors' Circular) to Sulliden shareholders prior to the expiry of the Century Offer (January 30, 2008).
The Directors of Sulliden are still considering recommending that shareholders of Sulliden reject the Century Offer. As stated in the Directors' Circular of December 13, 2007, the Directors and Senior Officers of Sulliden have all indicated their intention to reject the Century Offer and not tender their own Sulliden shares to the Century Offer.
The Board urges Sulliden shareholders not to tender to the Century Offer until a further communication is made by the Directors.
In the meantime, there is no need for Sulliden shareholders to do anything and any Sulliden shareholder who may have already tendered their shares to the Century Offer can withdraw them at any time until Century takes up and pays for these shares.
ABOUT SULLIDEN:
Sulliden Exploration Inc. is a mineral exploration company focused on the development of its Shahuindo gold and silver Project. The Shahuindo project is located in northern Peru, in one of the world's most prospective gold and silver regions, sitting approximately 25 km north of Barrick's Laguanas Norte-Alto Chicama 1,100,000 oz/gold per year mine; 70 km south of Newmont's multi-million oz/gold Yanacocha district and 200 km north of Barrick's Pierina 650,000 oz/gold per year mine.
The Shahuindo resource stands at 38 million tonnes grading 0.95 g/t Au and 22.99 g/t Ag, containing 1.2 million oz of gold and 28 million oz of silver (equivalent to 1.6 million oz of gold at a gold to silver ratio of 1:60) in the Indicated Category; and 17.2 million tonnes grading 0.62 g/t Au and 12.83 g/t Ag, containing 342,000 oz of gold and 7 million oz of silver (equivalent to 460,000 oz of gold at a gold to silver ratio of 1:60) in the Inferred Category - (Resource Estimation - Met-Chem Canada Inc. April 2005 filed on www.sedar.com).
Sulliden's rights to the Shahuindo property are in dispute and are the subject of extensive litigation in Peru.
Caution regarding forward-looking information:
Statements contained in this document which are not historical facts are forward-looking statements that involve risk, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. This forward-looking information includes, or may be based upon, estimates, forecasts, and statements as to management's expectations with respect to, among other things, the outcome of legal proceedings, the issue of permits, the size and quality of the company's mineral resources, progress in development of mineral properties, future production and sales volumes, capital and mine production costs, demand and market outlook for metals, future metal prices and treatment and refining charges, and the financial results of the company. Factors that could cause such differences, without limiting the generality of the following, include: volatility and sensitivity to market metal prices; impact of change in foreign currency exchange rates and interest rates; imprecision in reserves estimates; environmental risks including increased regulatory burdens; unexpected geological conditions; adverse mining conditions; political risks arising from operating in developing countries; legal title to properties, outcome of litigation, changes in government regulations and policies, including laws and policies; and failure to obtain necessary permits and approvals from government authorities; and other development and operating risks.
Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that mineral resources will be converted into mineral reserves.
Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this document. The Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Contacts
John F. Kearney
President
Tel: (416) 703-8287
E-mail: contact@sulliden.com
James H. Coleman
Chairman
Tel: (403) 267-8373
Craig Geier
Vice President and CFO
Tel: (416) 703-8287 |
