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Skeena Resources (TSXV:SKE) confirmed Friday that it has made a proposal to acquire Dolly Varden Silver. The company noted that its offer has an aggregate value of approximately $4.2 million.
Skeena Resources (TSXV:SKE) confirmed Friday that it has made a proposal to acquire Dolly Varden Silver. The company noted that its offer has an aggregate value of approximately $4.2 million.
Skeena made a previous offer to Dolly Varden on July 15, but the company “made no real response to the July proposal and, on August 30, made a counter-offer to Skeena which, in the opinion of Skeena, is not commercially realistic.”
As quoted in the press release:
Under the Proposal, each Dolly Varden Share would be exchanged for 2.763 Skeena shares, which values each Dolly Varden Share at approximately $0.221, representing a premium of 30% to the closing price of the Dolly Varden Shares on the TSX Venture Exchange on August 27, 2015 and 50.9% to the 10-day volume weighted average price of both companies’ shares.
Skeena believes that the Proposal is in the best interest of both Dolly Varden and Skeena shareholders. More specifically, the Proposal provides an opportunity for Dolly Varden to merge with a well-capitalized company that has the ability to fund exploration programs on Dolly Varden’s silver properties; Skeena has a dedicated technical team with a proven track record of successful mineral discoveries in British Columbia; and a business combination of Skeena and Dolly Varden will allow Dolly Varden shareholders to gain exposure to Skeena’s Spectrum high-grade gold project in northwest British Columbia.
A previous binding proposal was presented to Dolly Varden’s board of directors on July 15, 2015. That proposal was also at a significant premium to the market price of the Dolly Varden Shares as of that date. The board of directors of Dolly Varden rejected the binding nature of that proposal and discussions between the parties ceased.
Regrettably, Dolly Varden made no real response to the July proposal and, on August 30, made a counter-offer to Skeena which, in the opinion of Skeena, is not commercially realistic. The August Proposal has now expired and Skeena is discontinuing its current efforts to combine with Dolly Varden.
Skeena believes that there are meaningful synergies that could result from the combination of junior exploration companies with resources in British Columbia, including the reduction in duplicative overhead costs. Unlike many junior exploration companies, Skeena has demonstrated the ability to raise funding even in the current difficult capital markets and believes that consolidation will enable some junior exploration companies to survive and prosper through trough cycle conditions that may persist for several more years.
Skeena remains ready and willing to consider any reasonable proposal from Dolly Varden and to work with the board of directors and management of Dolly Varden to negotiate a business combination transaction that would benefit the shareholders of both companies.