The Northern Miner, 7/11/2008

No poison pill needed: Western Prospector

Confident that Khan Resouces' (KRI-T, KHRIF-O) hostile takeover bid has no chance of being accepted, Western Prospector (WNP-V, WEPGF-O) has waived its shareholder rights plan.

Western Prospector says it made the decision after discussions with major shareholders who say they will not tender their shares to Khan's offer.

Waiving the plan means the Western Prospector shareholders won't be able to exercise rights to buy shares cheaply to dilute the stock, should Khan acquire a significant percentage of Western Prospector shares.

Khan first made the offer on May 11. The expiry date of the offer has been extended until July 25 from July 15.

Western Prospector has urged shareholders to reject the offer, claiming that it's inadequate and that the companies don't share the same values.

Western Prospector shareholders would receive 0.685 of a Khan share for each Western Prospector share – a 34% premium based on the 20-day volume-weighted average trading price of both companies. The offer values Western prospector at US$35 million; not high enough to satisfy the company's board of directors.

"If Khan hopes to succeed in its offer for Western, it will have to offer shareholders fair value," said Gordon Pridham, chairman of the board's 'special committee' in a statement.

Khan CEO, Martin Quick is happy that the expiry date was extended.

"Shareholders can now fully consider the merits of our offer and the benefits of combining the two companies," said Quick.

The companies have uranium projects in Mongolia that are about 40 km apart.

Western Prospector's Gurvanbulag project has a resource of 22.3 million lbs. uranium oxide while Khan holds the Dornod project which has no resource. The company has invested US$6 million in the project, which was developed by former Russian owners between 1988 and 1955, who invested about US$150 million in the project.

Khan shares fell 4.5% or 4¢ today to 84¢ each on a trading volume of 75,000 shares.

Western Prospector shares were down 1¢ to 74¢ apiece on a trading volume of about 140,000 shares.