Eurasian Natural Res Acquisition
18 February 2010
Eurasian Natural Resources Corporation PLC
Acquisition of Chambishi Metals and Comit Resources
London - Eurasian Natural Resources Corporation PLC ('ENRC' or the 'Group')
today announces that it has entered into a conditional agreement ('the
Transaction') to acquire 100% of Enya Holdings BV ('Enya') which holds a 90%
interest in Chambishi Metals PLC ('Chambishi'), a Zambian copper and cobalt
producer, together with a 100% interest in Comit Resources FZE ('Comit'), a
Dubai-based marketing and sales company that historically has handled
Chambishi's copper and cobalt sales. The aggregate consideration for the
Transaction amounts to US$300 million, which will be wholly funded from ENRC's
existing cash resources. The Transaction remains subject to the satisfaction or
waiver of certain conditions precedent and is expected to be completed no later
than the end of June 2010.
The acquisition constitutes a 'smaller related party transaction' for the
purposes of the Listing Rules of the United Kingdom Listing Authority ('UKLA').
Chambishi is a mineral processing facility which produces copper and cobalt. It
is the intention of the management of ENRC to combine Chambishi with the Group's
existing operations in the Democratic Republic of the Congo ('DRC'). ENRC
currently plans to invest approximately US$80 million into Chambishi by the end
of 2011, in new and upgraded production facilities. The investment should
increase Chambishi's copper production capacity to 55 kt per annum of London
Metal Exchange ('LME') Grade A copper cathode.
The integrated copper and cobalt mining and smelting businesses of Chambishi and
those in the DRC, when combined, should have an improved cost position over
time. The acquisition also enables ENRC to fast-track its copper and cobalt
expansion and to achieve a higher planned level of combined total capacity, of
130 kt per annum of LME Grade A copper cathode and 12 kt per annum of cobalt
contained metal salts and concentrates by 2012.
Chambishi's current facilities comprise a roast leach electro-winning plant -
for the processing of oxide concentrate, sulphide concentrate or intermediate
metal salts - and an electric arc furnace and a pressure oxidation leach plant
for furnace slag treatment. Chambishi also owns a slag dump of approximately
16.6 million tonnes, with an average grade of 1.10% copper and 0.71% cobalt.
Current copper production capacity at Chambishi is 25 kt per annum of blister
grade copper. Chambishi is also a substantial producer of cobalt, one of the
largest in the world, with a current capacity to produce 6 kt per annum of
refined cobalt metal. The cobalt metal produced at Chambishi is high-grade and
has strong brand recognition in the industry.
Comit acts as a marketing and sales company for all of the copper and cobalt
production of Chambishi.
The independent Board and the management of ENRC believe that the Transaction,
agreed on an arm's length basis, has a compelling strategic rationale and will
create value for all shareholders.
Strategic Rationale for the Transaction
The strategic advantages for the Group offered by the acquisition of Chambishi
and Comit are:
· The Transaction will enable ENRC to fast-track its copper and cobalt
expansion. The acquisition of Chambishi provides the Group with a producing,
expandable facility to process sulphide concentrate - which will be supplied in
increasing quantity as our activities in the DRC mature. To build such a
facility would take at least three years and involve an investment in excess of
the current purchase price for Chambishi and Comit;
· The Transaction increases ENRC's exposure to copper and cobalt,
metals
with attractive longer-term fundamentals, following the Group's recent
acquisition of the Central African Mining & Exploration Company ('CAMEC'), which
went unconditional on 9 November 2009;
· The integrated businesses of Chambishi and those in the DRC, when
combined, should have an improved cost position;
· Comit provides access to established markets and customers for
refined
copper and cobalt, and possesses in-depth knowledge of markets for the products
of Chambishi; and
· ENRC will retain Chambishi's strong operational management team with
its
established regional knowledge and on the ground experience.
Commenting on the acquisition Felix J Vulis, Chief Executive Officer of ENRC,
said, "The Chambishi acquisition is in-line with our stated strategy, whilst
significantly enhancing the growth potential of ENRC's recently acquired copper
and cobalt business. Chambishi also furthers the geographic and product
diversification strategy of the Group. We are pleased with the potential that
this offers for all our shareholders."
Commenting on the acquisition, Mehmet Dalman, Independent Non-Executive Director
of ENRC and Chairman of the Board Mergers & Acquisitions Committee, said, "The
Board believes that the management's ongoing strategy to diversify and expand
the growth options of the Group, by both geography and assets, offers the best
potential for all shareholders of ENRC. The acquisition of Chambishi accelerates
the Group's expansion in copper and cobalt and at a lower cost than would be
required for new investment. The opportunity to work with the Founder
Shareholders and profit from their extensive exposure to metals and mining in
Eurasia, Africa and elsewhere, provides an additional advantage to the Group as
it looks to build its development potential."
Key Terms of the Acquisition
The Group has entered into a conditional agreement to acquire a 100% interest in
each of Enya and Comit and, as a result of the acquisition of Enya, will acquire
a 90% stake in Chambishi. ZCCM Investments Holdings PLC ('ZCCM') owns the
remaining 10% interest in Chambishi and The Minister of Finance and National
Planning of Zambia (the 'Minister') holds one 'special' share in Chambishi.
These minority shareholdings will remain in place following completion of the
acquisition.
The aggregate consideration for the Transaction, payable in cash, is US$300
million. On the signing of the conditional sale and purchase agreement, the
Group paid a deposit of 20% of the total consideration (US$60 million), which is
refundable in the event that the Transaction is terminated or lapses. The
balance of the consideration (US$240 million) is payable on completion of the
acquisition of Enya.
Conditions Precedent
The acquisition of Enya - and, therefore, Chambishi - is conditional upon (inter
alia) certain Zambian regulatory approvals being obtained. The acquisition of
Comit will be completed after the acquisition of Enya and is also conditional
upon the approval of the Jebel Ali Free Zone in Dubai.
Related Party Transaction
Each of Enya and Comit are wholly-owned subsidiaries of International Mineral
Resources BV ('IMR'), and Chambishi is therefore indirectly owned as to 90% by
IMR. IMR is controlled and beneficially owned by the three Founder Shareholders
of ENRC, who each own approximately 14.6% of ENRC's issued share capital. The
acquisition constitutes a 'smaller related party transaction' for the purposes
of the UKLA Listing Rules.
Credit Suisse Securities (Europe) Limited is advising ENRC in connection with
the transaction and has confirmed to the UK Financial Services Authority ('FSA')
that the transaction terms are fair and reasonable as far as the shareholders of
ENRC are concerned. Lazard & Co., Limited is acting as financial adviser to the
independent directors of ENRC for the purposes of providing them with a related
party opinion in connection with the acquisition.
http://www.nasdaq.com/aspx/stock-market ... cquisition
Jeu 18 Fév 2010 10:41 
