Pacific Booker board urges rejection of American Eagle takeover bid, studies Morrison project anew
TSX-V-listed Pacific Booker Minerals’ board has recommended that shareholders reject the hostile all-share takeover bid having been made by American Eagle Gold Corporation earlier this month.
The board made the decision following careful consideration and receipt of the unanimous recommendation of a special committee of its independent directors and after consultation with its financial and legal advisers.
The board, the special committee and the company’s advisers are of the view that the takeover offer fails to recognise the strategic value of the Morrison project; is lower in value than comparable transactions having been made in the copper sector; and deprives shareholders of significant upside potential in the standalone case.
Pacific Booker elaborates that the Morrison project is a large-scale copper/gold/molybdenum deposit in a Tier 1 jurisdiction (British Columbia) with mineral resources of more than two-billion pounds of copper and more than two-million ounces of gold supported by a completed technical report.
American Eagle’s bid values the Morrison project at about US$0.0/lb of copper in resources, which is at the low-end of the range of peer group precedent transactions of $0.02/lb and US$0.05/lb of contained copper in resources – or as much as an 80% discount – as well as comparable precedent transactions between $0.04/lb and US$0.09/lb of copper in resources.
Pacific Booker believes American Eagle is attempting to acquire this asset at distressed pricing before the company has had the opportunity to re-engage with First Nations stakeholders, reset the permitting pathway, or conduct a competitive strategic process.
The view of the board and management is that tendering common shares at the low price offered by American Eagle would deprive Shareholders of significant upside potential in their investment.
Pacific Booker also believes there to be risk in that the takeover bid is comprised entirely of American Eagle shares – a pre-revenue exploration-stage company. With American Eagle having no mineral resource or reserve estimates yet at its flagship NAK project or elsewhere, and no history of mineral production, there is “significant risk to shareholders in accepting American Eagle shares”.
In turn, American Eagle said earlier this month that the Morrison project has been on hold for 13 years and that Lake Babine Nation has already expressed support for American Eagle’s proposed acquisition of Pacific Booker and the Morrison project.
American Eagle CEO Anthony Moreau said the potential transaction provides Pacific Booker shareholders with the opportunity to participate in a well-capitalised company with momentum, strong backing, meaningful stakeholder relationships and a modern strategy to unlock value in the Babine district.
Moreau added that the historical development strategy of Morrison no longer reflects current realities, including changes in capital costs, permitting expectations, Indigenous engagement, project design and regional development strategy.
American Eagle believed the value of the project could be significantly enhanced if it were repositioned as part of an integrated Babine district strategy rather than being advanced as a stranded standalone asset.
In turn, Pacific Booker said on April 30 that the strength of the company’s standalone plan is positioned to deliver long-term value for shareholders and that the company is open to resetting engagement with the First Nation in a constructive and respectful way.
Pacific Booker says it is not opposed to a takeover should a superior proposal or alternative transactions arise; the board is fully prepared to evaluate these options and present them transparently to shareholders.
Pacific Booker intends to prepare a new preliminary economic assessment on Morrison to update the assumptions contained in its technical report.
