Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Oilsands Quest stock was trading below the rights offer price of 20c at the open on Friday after announcing it was extending a rights offer to advance its Axe Lake oil sands project in Saskatchewan a second time.
The company is attempting to raise $60 million after it was forced to go it alone following a fruitless 11-month quest to find a partner or buyer. Investors in the AMEX-listed firm who now have until 12 September to consider the offer have been on a bumpy ride. The stock is down 70% from its January highs of 64c and gained 63% in a single day after Saskatchewan granted the company 15-year leases – the first in the province – in July. But recent investors can feel smug about the fact that they did not buy into the junior during the frothy 2006 market. The counter hit a peak of $7.76 in March that year.
Cash-strapped Oilsands Quest and its financial advisors TD Securities left nothing off the table when it started the process in August last year and were considering strategic financing opportunities, asset divestitures, joint ventures and/or a corporate sale, merger or other business combination before
settling on a rights offer. Investors abandoning the stock in droves casts doubt on the success of a rights offer first announced mid-July.
MINING.com argued last week that Oilsands Quest is a prime example of the risks of trying to go it alone in the oil sands. Slack crude prices and a sluggish US economy may force other small players into mergers and reverse a slowdown in oil sands deals that have plunged 63% this year to $8.5 billion worth of transactions.
On July 15, the Government of Saskatchewan converted portions of permits – the first oil sands leases in the province – for Oilsands Quest’s flagship project at Axe Lake to 15-year leases. The Pembina Institute estimates the oilsands in Saskatchewan could hold as much as 2.3 billion barrels of bitumen, and cover an area of 27,000 square kilometres. Development of oilsands is still in its early stages in Saskatchewan, so there is still an opportunity to do things properly and avoid the mistakes in Alberta, the researcher said in a study.
Press Release August 26, 2011:
Oilsands Quest Inc. (“Oilsands Quest,” “OQI” or “the Company”), announced today that it is extending its ongoing subscription rights offering originally announced on July 18, 2011 (the “Rights Offering”) to September 12, 2011 at 5:00 p.m. Eastern Daylight Time (EDT). Holders of the subscription rights will now have until this extended date to exercise their rights or deliver a notice of guaranteed delivery. The Rights Offering was initially scheduled to expire on August 15, 2011 and it was then extended to August 26, 2011.
The Rights Offering has been extended to offer shareholders additional time to consider participation in the Rights Offering because some shareholders received the information packages about the Rights Offering later than expected. The Company is committed to ensure that its shareholders have adequate time to consider and participate in the offering. While the recent volatile market conditions have impacted the share prices of oil sands companies, OQI remains confident in the value that the Rights Offering presents to investors.
As previously announced, each holder of Oilsands Quest’s common stock as of the record date of July 28, 2011 received 0.816 subscription rights per share held for a total of 300,000,000 rights. The rights can be exercised at $0.20 per full share of common stock of Oilsands Quest Inc. Other than the new expiration date for the Rights Offering, all of the offering terms described in Oilsands Quest’s prospectus supplement dated July 20, 2011 remain the same and apply during the extended period of the offering.
This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration of qualification under the securities laws of any such state or jurisdiction.
Oilsands Quest has filed a registration statement (including a prospectus) with the SEC for the Rights Offering. Shareholder should read the prospectus in that registration statement and other documents the Company has filed with the SEC for more complete information about the Company and this Rights Offering. The documents are available free of charge by visiting EDGAR on the SEC website at www.sec.govd .
For a copy of the prospectus, shareholders may contact Georgeson, Inc., the information agent for the rights offering at (888) 613-9988 (toll-free) or the Oilsands Quest investor information line at (877) 718-8941 (toll-free).
