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Nunavut Iron's Bruce Walter no stranger to deal making Add to ...

For Bay Street deal maker Bruce Walter, the takeover battle for Baffinland Iron Mines Corp. and its huge iron ore deposit in Canada's Arctic isn't exactly unexplored territory.

From Barrick Gold Corp.'s Goldstrike mine in Nevada to Sherritt International Corp.'s Ambatovy nickel project in Madagascar and Centerra Gold Inc.'s Kumtor gold mine in Kyrgyzstan, Mr. Walter has helped put together some of the biggest mining deals done by Canadian companies in the last 30 years.

"He is a very, very, very smart deal-structure guy. He is a very good, very clever strategist," said Ian Delaney, chief executive of Sherritt International, a company that he and Mr. Walter took over in a highly publicized proxy battle in 1990.

Now Mr. Walter, 52, a former director of mergers and acquisitions at BMO Nesbitt Burns Inc., is in the public eye again, this time as chairman of Nunavut Iron Ore, a company he created specifically for the Baffinland bid.

The target is the junior explorer's Mary River project - located on Baffin Island in Canada's northern territory of Nunavut. Experts say it contains enough iron ore to supply the entire European market for years.

Developing the rich but remote and technically challenging project is expected to cost $4-billion.

Baffinland struggled for years to develop Mary River on its own and was close to signing a joint venture agreement on the project with Luxembourg-based ArcelorMittal, the world's largest steel producer, when Mr. Walter swooped in with a hostile takeover offer, causing the stock to soar.

"I had been aware of Baffinland for some time," Mr. Walter said from his ski chalet in the province of British Columbia. "It fit many of the criteria we have, which was that it was a good underlying asset but in an entity that seemed to be having trouble getting the financing and getting the pieces together to actually make the project go."

Mr. Walter thinks he and Nunavut chief executive officer Jowdat Waheed, a former consultant to Baffinland, can put those pieces together relatively quickly, and even have a small mine generating cash flow within two years.

"You can't solve lack of grade or underlying problems with an asset, but you can solve financing issues and project execution, which are things that we felt very strongly we could and can deal with," said Mr. Walter, whom friends and colleagues describe as a self-effacing man who prefers to stay out of the spotlight.

The Toronto native says his U.S.-based private equity backer, the $2-billion (U.S.) Energy & Minerals Group, has the support of major global pension and sovereign wealth funds and is experienced in developing major resource projects.

From a stock worth 35 cents (Canadian) just six months ago, Baffinland shares have now zoomed to $1.44 as Nunavut Iron and ArcelorMittal pursued their escalating takeover bids.

Both of the current offers expire on Jan. 10 and are very close on a per-share basis, but each promises a different species of gains.

ArcelorMittal, which is trying to reduce its dependence on third-party iron ore to feed its steel mills, is offering $1.40 a share for 100 per cent of the company. That bid values Baffinland at $550-million.

Nunavut's bid is for $1.45 a share, valuing the company at $570-million, but is for only 60 per cent of the shares.

Mr. Walter, who has a doctorate in shareholder rights and fiduciary duties earned on a fellowship at the University of Cape Town in South Africa in 1985, says the bid from Nunavut is best for equity investors because it gives them short-term profits as well as a stake in future gains through a proposed warrant.

"I think the offer that we have on the table today, how people will value that, turns entirely on how shareholders will view the value of ongoing participation in the development of the Mary River project if it's held in strong hands," he said.

Nunavut is not the first company Mr. Walter has launched for the sole purpose of taking over another.

In the late 1980s he and Mr. Delaney formed Canada SherGor Enterprises Ltd. to mount a very public proxy battle to take over Sherritt Gordon Mines, at the time a lead, zinc and copper producer struggling with low metal prices.

"It was a major event, a seminal event if you like in the sequence because I then became president of Sherritt and was involved with not just the deal making side but was hands-on with all of the operations," he said.

Mr. Walter, the father of four daughters aged 14 through 22, has served as a director of organizations as wide-ranging as the Salvation Army and Canada's National Ballet School.

But deal making is what has defined his career. As a young lawyer, he cut his teeth at Davies Ward & Beck in Toronto, where he played an important role in the formation of Barrick, now the world's largest gold company.

In 1986 he helped Barrick acquire the Goldstrike mine in Nevada which is still its flagship producer.

After the Goldstrike deal, he left Davies but kept close ties to the firm, which is now advising Nunavut on Baffinland.

As vice-chairman of Centerra Gold, a $4.7-billion company, Mr. Walter was key to firming up rights to the Kumtor gold mine in Kyrgyzstan.

"He was brought on to the board of Centerra to help and assist with negotiating our new investment agreement with the Kyrgyz government back in 2008 and 2009," said Centerra spokesman John Pearson.

Friends and colleagues say Mr. Walter has the track record to put Baffinland's Mary River project into production.

"Baffinland is a complicated transaction," said a top Canadian investment banker. "It's right up his alley."

 

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