Sherwood Copper Corp., owner of the Yukon's Minto copper-gold mine, has offered to purchase Western Keltic Mines Inc. in a friendly stock-swap transaction valued at about $37.52 million.

Acting with the blessing of Western Keltic's board of directors, Vancouver, B.C.-based Sherwood mailed its buyout bid to Western Keltic shareholders Dec. 24. Under the terms of the offer, Sherwood would acquire all of Western Keltic's nearly 80 million shares by issuing eight-hundredths (0.08) of a share of Sherwood stock for each share of Western Keltic stock. The purchase offer is open until Jan. 29

Based on the Nov. 23 closing price for Sherwood stock, the price equals about 47 cents Canadian per Western Keltic share, or a premium of 53 percent over Western Keltic's closing price on Nov. 23.

On Jan. 11, the closing price of Western Keltic stock on the Toronto Stock Exchange was 40 cents Canadian, while Sherwood stock closed at C$5.07

Western Keltic's board of directors has unanimously approved terms of the agreement and recommended the deal to the Vancouver, B.C. junior's shareholders.

Chance to double copper resources

Sherwood President and CEO Stephen P. Quin said the acquisition of Western Keltic and its copper-rich Kutcho Creek deposit would more than double the company's copper resources. The deal also offers the potential to continue Sherwood's transformation to a significant base metal producer, Quin said.

"We see the opportunity to redeploy our successful mine evaluation and development team to maximize the value of the Kutcho Creek property to the combined companies' shareholders," Quin said.

The Kutcho Creek copper-zinc deposit is located 100 kilometers, or about 62 miles, east of Dease Lake in northwestern British Columbia. It has a measured and indicated resource of 17.6 million metric tons, or about 19.4 million tons, of copper-zinc ore. Full commercial production was targeted for 2010.

"This transaction represents an attractive premium for our shareholders, while providing an excellent opportunity for Western Keltic shareholders to participate in the development of the Kutcho property without experiencing the level of dilution that would be necessary if Western Keltic were to advance the project independently," said Western Keltic CEO John McConnell.

"Sherwood should have access to financing, and cash flow from its Minto Mine operations, that could contribute funds towards the development cost of the Kutcho Creek deposit and an available development team with the experience to ensure the project moves ahead quickly.

Overall, I think this is a win-win for Western Keltic shareholders."

Kutcho Creek offers zinc, silver gold and copper

Western Keltic completed a pre-feasibility study in September that evaluated potential development of the Kutcho Creek deposit. The study showed that Kutcho Creek could be mined as a combined open pit and underground operation at a rate of 6,000 metric tons per day. It also estimated average annual production during the first five years of operation at 75.5 million pounds copper, 93.5 million pounds zinc, 753,550 ounces silver and 7,813 ounces gold. The capital cost estimate for developing Kutcho Creek is C$299 million. Initial mine life is projected for eight years, with capital recovery in 2.6 years.

Kutcho Creek could achieve first production in 2010 and create 250 permanent jobs, according to the pre-feasibility study.

This fall, Western Keltic has worked toward completion of a feasibility study by conducting geotechnical and environmental baseline studies, as well as advancing the permitting process for approval of production. The company also is actively engaged in discussions with the Talhtan and Kaska First Nations, as well as other local communities to ensure broad-based support for development of a mine at Kutcho Creek.

The Kutcho Creek deposit shares many similarities with Sherwood's Minto mine, being a smaller tonnage, relatively high-grade copper deposit with by-product credits, Quin said.

"These similarities suggest that our experiences, approach and skills built up over the past two years at the Minto Mine should be directly transferable to the design, construction, financing and operation of a mine at Kutcho Creek. We believe there is an opportunity to 'do it again' at Kutcho Creek, while learning from the challenges and successes experienced in the development of the Minto Mine," he added

Sherwood began shipping copper ore concentrates to Asia last fall via the Skagway Ore Terminal in Southeast Alaska.

Sherwood appoints new COO

Sherwood Copper has appointed Kevin Weston, a 25-year mining veteran, as its new chief operating officer, responsible for all operations at the company.

"The addition of Kevin Weston as chief operating officer significantly enhances our ability to pursue growth opportunities for Sherwood Copper, internally and externally," President and CEO Stephen Quin said in a statement Jan. 16.

"Kevin brings a tremendous amount of operating experience in a wide variety of operating environments to Sherwood. His experience will be a great asset as we look to continue the value enhancement of our high grade Minto copper-gold mine in the Yukon through further expansions in reserves and production and, should our offer for Western Keltic be successful, in the advancement of the Kutcho Creek project in British Columbia," Quin added.

Weston most recently served as vice president and general manager with Breakwater Resources, responsible for the Myra Falls base metal mine in British Columbia. His prior roles encompassed leading a contract mining company, working as a mining consultant and managing gold and base metal mines in Canada and abroad, in both open pit and underground settings.