Tuesday, 16 October 2012

Otis Gold announces shareholder rights plan

Otis Gold Corp. (CVE:OOO)(OTCQX:OGLDF) says it has adopted a shareholder rights plan subject to regulatory and shareholder approvals. 
The miner said the board, "in light of the company's low market valuation and pre-existing market conditions", has adopted the plan as a cautionary measure. 
It noted it has not been approached by any party regarding a takeover, and is not aware of any situations that would trigger the rights plan. 
The rights will allow shareholders to purchase one additional share of the company at a 50 per cent discount to the market price of the common shares at the time. 
The purpose of the plan is to provide shareholders and the board with enough time to consider any unsolicited takeover bids made as well as any "value-enhancing" alternatives, and to ensure that any proposed deal is in the best interests of the company. 
The rights under the shareholder plan can be used only if "a person, together with its affiliates, associates and joint actors", acquires or says it intends to acquire beneficial ownership of shares, equating to a stake of 20 per cent or more, other than through a permitted bid. 
Permitted bids have to be made by way of a take-over bid circular prepared in compliance with applicable securities laws and, among other things, must remain open for 60 days.
Otis Gold said it would seek shareholder approval of the rights plan at its next general meeting, scheduled for December this year. 
The company's shares have been on the rise lately, more than doubling in the last three months alone.
Otis has been bulking up its team as it advances the development of its flagship Kilgore project, recently appointing Dr. Roger Norwich as a director. 
Dr. Norwich, a founding director of the former TSX Venture Exchange-listed Mexican Silver Mines, which merged with Rio Alto Mining (TSE:RIO) in 2009, remains an independent director of Rio Alto. 
In the summer, Otis Gold unveiled an updated NI 43-101 resource estimate for its Kilgore gold deposit located in Clark County, Idaho. 
The Kilgore gold deposit now contains an indicated resource of 520,000 ounces gold in 27.35 million tonnes at a grade of 0.59 grams per tonne (g/t) gold, representing an increase of 138 per cent in the number of ounces and 328 per cent in the number of tonnes compared to the deposit’s 2002 estimate.
Additionally, Kilgore has an inferred resource of 300,000 ounces gold in 20.23 million tonnes at a grade of 0.46 g/t gold, representing an increase of 12 per cent in the number of ounces and 131 per cent in the number of tonnes versus the 2002 estimate.
CEO Craig Lindsay noted at the time that while the overall grades in the estimate are lower than in 2002, the size of the resource has increased substantially and the strip ratio has improved comparatively.
An important achievement for the company this year was also the addition of 1,880 acres, boosting its land position at Kilgore by 58 per cent and giving the miner flat land that is appropriate for heap leach processing.

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