TRADING SYMBOL: EAM-TSXVenture 12G EXEMPTION No. 82-2647
VANCOUVER, Jan. 8 /CNW/ - The Board of Directors of Ecstall Mining Corporation (TSX Venture: EAM) ("Ecstall" or the "Company") has unanimously recommended that shareholders reject the unsolicited offer from Mantle Resources Inc. and not tender their shares into the offer.
The Board's recommendation, including a discussion of its reasons for rejecting the Mantle Resources hostile bid, is contained within a Directors' Circular to be filed today with Canadian securities regulators. A copy of the Circular will be available on SEDAR at www.sedar.com. In addition, copies of the Circular are being mailed to the Company's shareholders. Ecstall shareholders are urged to read the Directors' Circular in its entirety.
In making its recommendation, the Board considered many factors, including the written opinion of its financial advisor, Westwind Partners Inc. Westwind's opinion states that the consideration under the Mantle bid is inadequate, from a financial point of view, to Ecstall shareholders. The full text of the Westwind opinion is included in the Directors' Circular.
Chairman's Comment
"The Mantle offer is not in the best interests of Ecstall shareholders and we are advising shareholders to reject the Mantle offer and not to tender their shares," said Chris Graf, Chairman of the Board of Directors and President and CEO of Ecstall. "The offer is financially inadequate and fails to appropriately value Ecstall's Akie deposit, its other promising mineral properties in the Kechika Trough sedex zinc district and its many gold properties including the South Okanagan epithermal gold project. Further, the timing of the offer is opportunistic, prejudicial and disadvantageous to shareholders, particularly because the bid was launched at a time when shareholders have not had an opportunity to review pending information that will assist shareholders in assessing the value of the Ecstall Akie property. That pending information includes a technical report, being prepared by an independent party and in accordance with National Instrument 43-101, that will have a mineral resource estimate and a prefeasibility study. The Board expects this technical report to be issued and filed on SEDAR during the week of January 15, 2007."
"Further," said Mr. Graf, "since Mantle is proposing that Ecstall shareholders exchange each Ecstall share for 0.40 of a Mantle share, the value of the consideration being offered by Mantle is uncertain and dependent on the future value of Mantle shares. During the 18 month period prior to December 15, 2006, the closing price for Mantle's shares on the TSXV varied from a high of $1.58 to a low of $0.15. This volatility represents significant risk for Ecstall shareholders."
Reasons for the Recommendation
Ecstall's Board has carefully reviewed the Mantle offer and believes that the offer fails to provide full value for Ecstall's assets and is an attempt by Mantle to acquire the Company without offering adequate consideration to Ecstall shareholders. The principal factors considered by the Board in concluding to recommend to shareholders that they reject the Mantle bid and not tender their shares include the following:
- The Board believes that the Mantle offer significantly undervalues
Ecstall's exploration properties and its growth potential.
Ecstall's most important property, the Akie property, hosts a
sedex zinc-lead-silver-barite deposit. Such deposits are highly
attractive because they are often very large, high grade and
difficult to discover or acquire. Ecstall has retained an
independent party to prepare a technical report, in accordance
with National Instrument 43-101, that will have a mineral resource
estimate and a pre-feasibility study.
- The Board has received a written opinion from its financial
advisor, Westwind Partners Inc., that the consideration under the
Mantle offer is inadequate from a financial point of view to the
Ecstall shareholders.
- The share consideration offered by Mantle is volatile, of
uncertain value and dependent on the future value of the Mantle
Shares.
- Alternative transactions are being pursued by the Board to
generate greater value for Ecstall's Shareholders. While it is
impossible to predict whether any transactions will emerge from
these efforts, the Board believes that Ecstall and its assets are
potentially very attractive to other parties.
- The Board believes that the timing of the Mantle offer is
opportunistic, prejudicial and disadvantageous to Shareholders. By
leaving the offer open only for 38 days, eight of which were over
the Christmas and New Year holiday period, Mantle is not only
limiting the time available for the Board to consider and develop
alternatives so as to maximize shareholder value, Mantle is also
denying Shareholders the time and opportunity to fully consider
pending developments and make an informed decision.
- The Mantle offer is highly conditional, containing 18 conditions,
some having a number of sub-conditions, which must be satisfied or
waived before Mantle is obligated to take up and pay for any
Shares deposited under the Offer.
A complete list of the reasons for the Board's recommendation and a full discussion of those reasons are provided in the Directors' Circular. The Board encourages shareholders to read the reasons in their entirety.
Shareholder Rights Plan
The Company has a shareholder rights plan agreement implemented on November 29, 2006 and effective January 5, 2007. The purpose of the shareholder rights plan is to seek to ensure that all shareholders are treated fairly in any transaction involving a change in control of Ecstall and have an equal opportunity to participate in the benefits of a take-over bid. The Mantle bid is not a "permitted bid" under the terms of the plan agreement.
How to Withdraw Shares from the Mantle Offer
Shareholders who have questions or who may have already tendered their shares to the Mantle offer and wish to withdraw them, may do so by contacting Kingsdale Shareholder Services Inc., the information agent retained by Ecstall, toll free at 1-866-833-6980.
About Ecstall Mining Corporation
Ecstall is a Vancouver based mineral exploration and development company that has been listed on the TSX-Venture Exchange since 1989 and trades under the symbol "EAM". Ecstall's exploration and property acquisition efforts are focused on polymetallic massive sulphide targets (VMS copper-zinc-gold and Sedex zinc-lead-silver) in British Columbia and Alberta, as well as four advanced gold projects in the Eskay Creek and South Okanagan areas of British Columbia. Ecstall has an extensive portfolio of mineral properties, including the Akie sedex zinc deposit, the adjacent Pie and Yuen sedex zinc projects and about 60 km of other claims located along the prospective Gunsteel shale within the Kechika Trough Zinc District of northern British Columbia.
ON BEHALF OF THE BOARD OF DIRECTORS
ECSTALL MINING CORPORATION
"CHRIS GRAF"
CHRIS GRAF P.ENG., CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Caution Regarding Forward-Looking Statements
Certain statements contained in this press release constitute forward-looking statements or forward-looking information under applicable Canadian securities legislation and are prospective in nature. These statements are related to future events. All statements other than statements of historical fact may be forward-looking statements or forward-looking information. Forward-looking statements or forward-looking information are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions and the negative of such expressions. Statements concerning resource estimates also may be deemed to be forward-looking statements or forward-looking information in that they involve predictions of the mineralizations that will be encountered if and when a deposit is developed and mined. Forward-looking statements and forward-looking information involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements or forward-looking information. Forward-looking statements and forward-looking information are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking statements or forward-looking information including, without limitation: whether competing bids for Ecstall or other transactions emerge; whether the conditions of any proposed transaction are met; uncertainty of production at Ecstall's mineral exploration properties; risks related to Ecstall's ability to commence production and generate material revenues or obtain adequate financing for its planned exploration and development activities; uncertainty of capital costs, operating costs, production and economic returns; risks related to Ecstall's ability to finance the development of its mineral properties; permitting risks and the need for government cooperation in the development of the Akie property, as well as other properties; risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of Ecstall's mineral deposits; commodity price fluctuations and general economic conditions; risks related to governmental regulations, including environmental regulations; Ecstall's ability to attract and retain qualified management; mining and development risks, including risks related to accidents, equipment breakdowns, labour disputes or other unanticipated difficulties with or interruptions in production; uncertainty related to unsettled aboriginal rights and title in British Columbia; uncertainty related to title to Ecstall's mineral properties; Ecstall's history of losses and expectation of future losses; and increased competition in the mining industry.
The Board of Directors believes that the expectations reflected in those forward-looking statements or forward-looking information are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements or forward-looking information should not be unduly relied upon. These statements speak only as of the date of this press release. The Board of Directors does not intend, and does not assume any obligations, to update these forward-looking statements or forward-looking information, except as required by law.
The TSX Venture Exchange has neither approved nor disapproved the
contents of this press release.