3rd UPDATE: Zijin Mining Launches A$545 Million Bid For Indophil
01 Dezember 2009 - 6:14AM
Dow Jones News
Chinese gold producer Zijin Mining Group Co. Ltd. (2899.HK) said
Monday it is making a A$545 million friendly takeover bid for
Indophil Resources NL (IRN.AU) that will give it a stake in the
US$5.2 billion Tampakan copper-gold project in the Philippines.
Indophil said its directors have recommended the offer, which is
pitched at A$1.28 a share and represents an 18% premium to the last
trade in Indophil shares and an 83% premium to their average price
over the past six months.
Indophil's biggest shareholder and Tampakan's majority owner,
Xstrata PLC (XTA.LN), has entered into a pre-bid agreement with
Zijin which gives the Chinese group control of its 19.99% holding,
subject to a higher offer emerging.
The deal would give Zijin, China's biggest gold producer, a
34.2% stake in Tampakan with the right to up this to 37.5%.
Indophil Chairman Brian Phillips said the deal unlocked value
for Indophil's shareholders and was a positive for the project as
Zijin was well placed to fund its share of the US$5.2 billion
development.
"The Zijin proposal recognizes Tampakan's inherent value and
follows a comprehensive ownership review process in which the
board, management and advisers have considered a range of strategic
alternatives and proposals from interested parties," he said in a
statement.
Xstrata Copper Chief Executive Charlie Sartain said Zijin's
offer clearly demonstrates the attractiveness of the Tampakan
project.
"Xstrata welcomes the introduction of a joint venture partner
with the capacity to support the advancement of the Tampakan
project," he said in a statement.
Tampakan has an estimated mineral resource of 2.4 billion metric
tons of ore containing 13.5 million tons of copper and 15.8 million
ounces of gold.
A feasibility study into the project is due to be completed in
the second quarter of 2010 with first production planned in
2016.
Indophil said that, based on current estimates, Tampakan is
expected to have an average annual production rate of 340,000 tons
of copper and 350,000 ounces of gold in its first 20 years of
operation.
A takeover bid by Xstrata for Indophil, also pitched at A$1.28 a
share, was last year rebuffed by the target company's board but
since then Indophil's shares have been savaged, falling as low as
22.5 cents in January.
They have since staged a partial recovery after Indophil
revealed that a number of parties had expressed interest in buying
its Tampakan stake.
The Zijin offer is conditional on the bidder winning a 90% stake
in Indophil and on receipt of Australian and Chinese regulatory
approvals.
Australia's Foreign Investment Review board had previously
approved both Xstrata's bid for Indophil and a rival proposal
backed by Hong Kong merchant bank Crosby Capital Ltd. (8088.HK) and
approval of Zijin's bid looks unlikely to be a barrier to the deal,
given the asset is in the Philippines.
At 0426 GMT, Indophil shares were up 10.6% to A$1.20 in a
broader Australian market up 0.2% while Zijin shares were up 5.6%
to HK$8.58 in a broader market up 0.5%.
Deutsche Bank analysts said the acquisition looks positive for
the Chinese group as it helps it diversify geographically and
widens its exposure to a broader range of metals.
Another analyst said Zijin is taking on risk associated with the
delivery of the Tampakan project, with the mine still in the
feasibility stage and located in the politically unstable south of
the Philippines.
-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094;
alex.wilson@dowjones.com
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