The $750 Million Magnesium Deal That Came Up $750 Million Short – by Danielle Bochove, Natalie Obiko Pearson and Kristine Owram (Bloomberg News – November 8, 2017)

It was one of 2017’s mega mining deals. And then it wasn’t. West High Yield (W.H.Y.) Resources Ltd. — the tiny Canadian explorer that surged nearly 1,000 percent last month after announcing a pact to sell its main assets for $750 million — said the deal has collapsed. The buyer couldn’t come up with a deposit for less than 1 percent of the transaction value, or $500,000.

“The purchaser failed to pay the deposit” by the Nov. 6 deadline, Calgary-based West High Yield, which trades under the ticker WHY, said in a statement late Tuesday. “The board of directors of the company decided to terminate the agreement.”

The collapse ends a transaction that sparked a review by regulators following West High Yield’s extraordinary surge on Oct. 5 after it announced the deal. The stock jumped to C$2, from just 36 cents the previous day, giving the company with no revenue a market value of C$114 million ($89 million).

The cash deal to sell the magnesium deposit in British Columbia to Gryphon Enterprises LLC would have been worth about 46 times West High Yield’s value the day before the announcement, making it one of the biggest mining asset sales in the world this year.

From the beginning there were questions about the deal, and the stock surge raised eyebrows among some investors in Canada, where the junior stock exchange has been dubbed the “wild west” for its volatile penny stocks.

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