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Small article on HRG
Dec 30, 2009 07:55PM
Copied from another site because it makes interesting reading:
NEW YORK (Commodity Online): Canada’s High River Gold Mines Ltd is in a soup now. And giants after now lurking around to takeover the mining company. One of the prospective buyers is Russian metals giant OAO Severstal.
High River’s tale begins with a liquidity problems during the recession last year.
Afteran overhaul of the board, High River was bailed out through a pair of private placements with Severstal, which assumed a 57% control stake.
Severstalthen made a friendly all-cash offer for the whole company in June, valued at 22¢ a share. That was well above the 4¢ that the stockbottomed out at last year, but a fraction of its value prior to the liquidity problems.
A group of large shareholders, includingSprott Asset Management and funds from Russia, complained that the offer was too low for a company that could produce 300,000 ounces of gold this year from mines in Russia and West Africa.
Severstal responded by raising its bid to 30¢ a share, valuing High River at about $195-million.
But those investors continue to oppose the merger.
Shareholders are ready to accept and offer of average minimum price of $1.44 a share.
Since taking control of High River, Severstal has made some personnel changes at the mines and improved performance.