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West High Yield (W.H.Y.) Resources Ltd., a little-known Canadian miner, surged almost 1,000 percent after it said it sold its magnesium deposit to a U.S. buyer for $750 million -- 46 times its market value.
West High Yield jumped as much as 956 percent and was up to $2.01 as of 2:17 p.m. in Toronto after it released a statement that said it sold its main assets to Maryland-based Gryphon Enterprises LLC. The shares, which trade under the ticker WHY, closed Tuesday at 36 Canadian cents for a market value of $20.6 million.
Frank Marasco, chief executive officer of West High Yield, said he got the price he deserved for the asset, 7,891 acres near Trail, British Columbia, just north of the Washington state border. The deal shows the company's shares have been suppressed for past four years due to poor market conditions for junior miners, Marasco said Thursday in a phone interview.
"If you calculate the three sections of the land, there is about 3,000 years of supply" of magnesium that can be extracted from the property, Marasco said.
The financial backer of the deal wants to "stay anonymous at this point," Marasco said. Gryphon went through about five years of due diligence on the property and the funders went through about year-and-a-half, before pulling the trigger on this deal, he said.
Stephen Cummins, CEO of Gryphon Enterprises, declined to comment on the deal when reached by email.
West High Yield plans to call a special shareholders meeting to seek approval for the deal from shareholders in December, according to the statement.
According to a company filing, the Toronto offices of law firm Baker McKenzie represents the purchaser Gryphon. Greg McNab, a partner at the firm who is also its global head of mining practice, was unaware of the transaction.
"I'm not aware than we act for them," McNab said by phone Thursday. "We're not aware of any role in it."