Freewest Resources (FWR-V) president and CEO Mackenzie Watson says he will "absolutely" reject a hostile takeover bid from "Ring of Fire" rival Noront Resources (NOT-V), once he receives the official offer, sometime during the next two weeks.
"(Noront management) are hired guns and hired guns are not out there to find anything, they're out there to grab something," Watson says.
Watson flatly denies Noront's suggestion in its Oct. 5 press release that "friendly" takeover negotiations for Freewest had broken down.
"There are a lot of lies in there," says Watson, in reference to Noront's release. "They (only) called me after I had left the office on Friday. You can't believe everything they say."
Noront is offering one share for four shares of Freewest. The bid implies a price of $0.3975 per share, a 51% premium to Freewest's 30-day volume-weighted average price before Oct. 2. The offer valued Freewest at slightly less than $90 million.
Shares in Freewest closed at $0.40 on Oct. 6, a day after the bid was announced. Noront shares, meanwhile, closed at $1.61 for a market cap of about $264 million.
Noront CEO Wes Hanson said Freewest shareholders are "being invited to benefit from the enhanced opportunities that the offer presents. We look forward to Freewest's shareholders participating in a larger, more liquid company with approximately $37 million in estimated working capital to realize the full potential of the combined properties."
Noront is interested in Freewest's Black Thor, Black Label and Big Daddy chromite properties near McFauld's Lake, in far northern Ontario. Spider Resources (SPQ-V) and KWG Resources (KWG-V), two other players in the McFauld's camp, are earning a 60% interest in Big Daddy.
Freewest's chromite deposits are quite close to Noront's Blackbird One and Blackbird Two chromite deposits.
Micon International is calculating a National Instrument 43-101-compliant estimate for Blackbird One and Two, while Freewest continues to drill Black Thor with the hope of having a resource estimate by the end of the year.
Black Thor is thought to be the largest chromite deposit in the camp.
"I didn't think our chromite was any good. (Noront) has been saying our chromite is no good and theirs is the best so I don't understand it, really," Watson says, with measured sarcasm.
Lost in the shuffle but unlikely lost on Noront is Freewest's 4.1 million shares in Quest Uranium (QUC-V), which closed at $3.04 per share on Oct. 6. That values Freewest's Quest stake at $12.4 million.
Despite his contempt for Noront's offer, Watson suggested he would be interested in a straight cash deal for Freewest's chromite deposits but said he wants to keep Freewest and its Quest shares.
Watson says he would most likely dividend the cash from any such sale out to shareholders.
Freewest recently finished making presentations to several Toronto brokerage houses and had managed to get its share price to $0.32 on Oct. 2, up from $0.25 on Sept. 25.
Watson believes that sudden price increase prompted Noront's bid.
It should be noted that Noront's offer is not a "Permitted Bid" under Freewest's shareholder rights plan. That means the Freewest board must be either kill its shareholder rights plan or Noront will need to go before a judge and make the case that its bid should proceed.
Watson, for his part, is primed for a fight.
"May the best man win," he says.
