UPDATE 1-Continental Minerals in talks about potential sale

Wed Sep 15, 2010 6:16pm EDT

* In advanced talks with unnamed third party

* Says no assurances on outcome of discussions

By Euan Rocha

TORONTO, Sept 15 (Reuters) - Continental Minerals KMK.V said on Wednesday it is in advanced discussions with a third party regarding a possible sale of the company.

The Canadian-listed exploration company, which is focused on developing its Xietongmen copper-gold project in China's remote Tibetan plateau, said that while it anticipates a speedy resolution to the talks, it can give no assurances at this time about the outcome.

Shares of the TSX Venture Exchange-listed company were halted before market hours on Wednesday, at the company's request.

A spokesman for Continental declined to comment on the reasons behind its request for a trading halt, which came into effect hours before its announcement about the possible sale.

The Xietongmen project is expected to produce 116 million pounds of copper and 190,000 ounces of gold and 2.4 million ounces of silver annually over a 14 year mine life.

Continental said it has already received most of the approvals required for the project. It is currently awaiting the final mining license and project approval report.

Continental's two largest shareholders are diversified Chinese miners Zijin Mining (601899.SS) and Jinchuan Group [JCGRP.UL]. Zijin currently owns a 13.8 percent stake, while Jinchuan owns 11.8 percent.

Canada's Taseko Mines (TKO.TO) owns a 5.1 percent stake in the company, which has already seen its shares rise more than 90 percent in the last 12 months.

Shares of Continental, which has a market capitalization of about C$350 million ($340 million), were halted at C$2.30 before trade began on Wednesday.

Earlier this month, Continental adopted a shareholder rights plan, which acts as a poison pill in the event of an unsolicited takeover bid.

Continental said the rights plan would give its board adequate time to assess a takeover bid, consider alternatives and allow competing bids to emerge. At the time, it also stated that it was not aware of any pending or threatened takeover bid.

The rights plan is set to trigger if one entity acquires 20 percent or more of the common shares without complying with the "permitted bid" provisions of the plan, or without the approval of the board.

($1=$1.03 Canadian) (Reporting by Euan Rocha; editing by Rob Wilson)

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