TORONTO (miningweekly.com) – TSX-V-listed Visible Gold Mines on Friday filed an application with the Québec Bureau de décision et de révision seeking a cease-trade order and other sanctions against the unsolicited offer by Canadian National Stock Exchange-listed Zara Resources to buy all of the outstanding shares of Visible Gold Mines in an all-script transaction.

On August 19, Zara announced its offer to simultaneously buy out the issued share capital of Altai Resources, Greencastle Resources and Visible Gold Mines.

Visible Gold’s application was based on alleged significant irregularities and deficiencies in the unsolicited offer by Zara.

In particular, the company noted the absence of a French version of Zara’s takeover bid circular, which violated a fundamental rule of Québec securities law and made the offer illegal.

Visible Gold had also noted the sale by Zara CEO and principal shareholder, Danny Wettreich, of almost two-million Visible Gold shares on August 19, the day on which Zara first announced its offer. Visible Gold considered the sale to be in direct contravention of applicable securities laws.

The application by Visible Gold Mines also invoked the failure by Zara Resources to adequately disclose, in its takeover bid circular, that Zara's offer to acquire 100% of the outstanding shares of Visible Gold was independent of the simultaneous offers made by Zara for 100% of the shares of two unrelated mining exploration companies, and was not conditional upon the success of the two other offers.

If a cease-trade order is issued by the Québec Bureau de décision et de révision, Zara would not be allowed to issue shares to Visible Gold shareholders in Québec in payment for their shares.

Visible Gold, in a statement, recommended that shareholders defer taking any action in respect of the unsolicited offer by Zara until shareholders have received further communication from the Visible Gold board. The offer by Zara is open for acceptance until October 28.

Zara offered to acquire Visible Gold at a price of C$0.05 a share, to be paid by issuing 0.4167 shares of Zara in exchange for each tendered Visible share. Based on the most recent trading price of Zara, at C$0.12, and of Visible, at C$0.015, prior to Zara's recent offer for 19.9% of Visible, that is a premium of 233%.

Zara also offered to acquire Greencastle Resources at a price of C$0.14 a share to be paid for by issuing 1.1667 shares of Zara in exchange for each Greencastle share tendered. Based on the most recent trading price of Zara, at C$0.12, and of Greencastle, at C$0.06, that is a premium of 133%.

Altai Resources shareholders would receive C$0.17 a share, payable by 1.4167 shares of Zara for each Altai share. Based on Altai’s recent price of C$0.085, this is a premium of 100%.