Whither Baffinland?

In a hostile takeover bid announced Sept. 22, a private equity firm based in Texas called Energy and Minerals Group is making financing a big move on the Baffinland Iron Mines Corp., owner of the immense Mary River iron property on north Baffin Island.

(Update Sept. 23) There’s a better news story here. EMG is providing Nunavut Iron Ore Acquisition Inc., wholly owned by Iron Ore Holdings Inc. of Australia, with the cash required to complete the takeover bid. The new company includes Bruce Walter, a former president of Sherritt International, which owns oil, gas, nickel and power generation interests in Cuba.

Baffinland has responded with a press release announcing they’ve formed a committee to study the offer and make recommendations to shareholders. Your humble content provider’s gut intuition says Baffinland’s board is likely attempting to buy enough time to encourage an even better offer for their company’s undervalued shares.

The market value of Baffinland shares has jumped by about two-thirds on news of the offer.

I can’t help but wonder what Gordon McCreary, the former CEO of Baffinland, a man who’s dreamed for more than 30 years about developing this resource, must be thinking today. And the cynical conspiracy theorist that lurks inside the darkest corners of my brain also wonders if McCreary’s departure from the company earlier this year is related to issues concerning who should own the firm and best finance the Mary River project in the future.

I’m also surprised that this takeover bid should come from an Australian company, rather than some entity based in China.

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