Yukon area plays shine in the wake of takeover offer
Underworld Resources (TSX: V.UW, Stock Forum) shares jumped sharply after it announced Kinross Gold (TSX: T.KGC, Stock Forum) had made a friendly takeover bid for the company.
The offer of 0.141 of a Kinross common share, plus a penny in cash per Underworld share represents a 36% premium on Underworld as of the close on March 10, 2010. Kinross already held 8.5% of the company.
Underworld has a 100% interest in the White Gold property in the Dawson Placer district Yukon.
While the market liked the deal and sent shares 36% higher, not everyone was overjoyed at the offer, with some on the company Bullboard, including Teatimenow,cisco3 and goldplay wondering whether another entity would make a higher offer.
BFREE2 opined: “They may be offering a 36% premium over the March 10 closing price.......but we all know that Underworld has been WELL undervalued for quite some time. 36% is a little light in my estimation.”
Many posters referenced the Canplats takeover, where Goldcorp (TSX: T.G, Stock Forum) and a subsidiary of Newmont Mining (NYSE: NEM, Stock Forum) battled over the small exploration company with Mexican gold properties.
“Based on the Canplats deal, this should really command approx twice the price and that is conservative given the potential of other zones,” wrote figtrader. “I'm surprised management is even contemplating the sale other than to bring out value.”
Northern Tiger Resources (TSX: V.NTR, Stock Forum), which focuses its exploration in the Dawson range as well, shot 83% higher. Just last week, the company announced it had signed a letter of intent to acquire the 3Ace property in southeastern Yukon.
SeventhSon7 suggested that the takeover offer for Underworld was a great thing, because it would funnel cash into a smaller entity, rather than just into larger and better-known producers. “These infusions of cash free up money for smaller investors to move further down the food chain with. I've seen big gains in some smaller gold companies I've got investments in such as Trelawney Mining and Eagle Hill... now if only Northern Tiger can get some good results from 3 Aces and up its market exposure a bit, we can be cashing in with these big gains too. When you have such high gold content as the veins show at 3 Aces, it should not take long to come up with some tangible numbers enticing enough to get the market truly excited.”
