As the open offer to purchase all the issued and outstanding common shares of Sennen Resources by the dual-listed mining company Liberty Silver (OTC: LBSV) ended two days ago, traders continue to speculate on a successful acquisition. The share price of Liberty Silver shot up by 10.6% to reach a 52-week high of $1.14 per share. Liberty silver, which was trading at $0.70 on August 20, 2012, has gained 62% in the past three weeks.
Liberty Silver’s flagship project, Trinity Silver, is located in Pershing County, Nevada. Liberty Silver’s management, based on geological and past drilling data, believes that the 9,960-acre property, which includes a former producing mine, contains additional drilling targets that have not yet been identified.
The meteoric rise of silver prices induced merger and acquisition activity among several mining companies in the past few years. On July 16, 2012, Liberty Silver announced an offer to acquire all the outstanding common shares of a debt-free mineral exploration company, Sennen Resources. As per the offer, Sennen shareholders will receive 0.28 of a Liberty Silver common share for each Sennen common share. The $13.36 million deal valued each common share of Sennen at $0.20, a 47.3% premium to the 20-day (ended July 13, 2012) weighted average trading price of $0.135.
The announcement was followed by an open letter on July 26, 2012, by Liberty Silver to the shareholders of Sennen. In its open letter, Liberty Silver highlighted the need for a consolidation in the mining sector and the benefits for shareholders in the event of Sennen getting acquired by it. Sennen quickly reacted in a day, referring to the announcement and open letter as a “hostile” take-over attempt. Sennen also informed shareholders that a special committee of the board of directors had been set up to review Liberty’s offer, and urged its shareholders to refrain from responding to Liberty until a suggestion is made by the review committee.
On July 31, 2012, Sennen’s review board unanimously rejected Liberty Silver’s offer, citing various reasons such as the inability of the latter to raise cash and limited operating history. Liberty Silver followed on August 9, 2012, with another open letter criticizing Sennen’s Board and management. Five days later, Sennen’s management responded with a statement asking for Liberty management’s US Insider filings. Sennen, reminding the shareholders to reject the offer, claimed that they were yet to receive any sort of formal communication from Liberty Silver. Sennen, on August 20, 2012, issued a detailed statement clarifying and stressing the need to reject the takeover offer from Liberty Silver on an outright basis.
Ian Rozier, President and CEO of Sennen, stated, “Liberty’s Offer is an insult to the intelligence of Sennen Shareholders who understand that this is a clear case of the management and promoters of an OTC shell company with very little money and questionable assets trying to back their ludicrously overvalued paper into an established company with tangible assets-in this case Sennen and its treasury. We repeat once again, Liberty’s Offer is of zero interest to Sennen’s Board, management, as well as to shareholders representing a majority of the Company’s shares, if indeed any of them.”
Liberty Silver, on August 21, 2012, extended its offer for common shares of Sennen Resources until September 10, 2012. Sharing his optimistic views, Geoff Browne, Liberty Silver’s chairman and chief executive officer stated, “We remain confident that tendering to our offer represents the best value for Sennen shareholders rather than maintaining Sennen’s status quo.” Geoff Browne also criticized Sennen for not coming up with a superior or an alternative proposal.
With the time for offering the shares of Sennen ended two days ago, Liberty Silver’s share price continues to rally on the hopes of a successful acquisition, which will allow access to $13.5 million in Sennen’s treasury. Liberty Silver needs money for its Trinity Silver Project.
Liberty Silver ended the day at $1.14 per share, up 10.6% or $0.11 on a volume of 924,698 shares.