Metorex in demand as Jinchuan tops Vale's offer
05 JUILLET, 2011 16:33
A new potential suitor arose on Tuesday for Metorex, as Chinese group Jinchuan announced its firm intention to make an offer of R8.90 per share for the South African diversified miner.
Articles
Jinchuan makes cash offer for Metorex
This values the company at R9.1 billion and tops the R7.35 perr share offer from Brazilian resources giant Vale, which was made in April, and values the company at R7.5 billion. Metorex's share immediately reacted, jumping 49c, or 6%, to R8.52 on the JSE.
Jinchuan is China's largest producer of nickel, cobalt and platinum group metals.
Rob Still, Chairman of Metorex, said the receipt of a firm intention from Jinchuan to make a cash offer of 8.90 rand per share to Metorex shareholders marks a significant step in this ongoing process.
He said the Board has determined, after taking all aspects of the Jinchuan firm intention into consideration,that the Jinchuan offer constitutes a superior proposal to that received from Vale S.A., which is the subject of a circular and general meeting scheduled for 22 July.
"Vale is now being afforded an opportunity to match or better the Jinchuan offer prior to any further advances in this process. The Independent Board continues to act in the very best interests of all Metorex shareholders," Still said.
Metorex in demand
Metorex has been approached by various parties interested in acquiring the company, given its critical mass, managerial record and strategic platform to operate and develop future mines in the Central African Copper Belt.
Still added that Metorex in late 2010 implemented a highly disciplined and professional process, under a tight legal and confidentiality regime, to allow qualified and credible parties the necessary access to the company to facilitate a potential offer for consideration by the Board and, ultimately, its shareholders.
On 8 April, Metorex announced a binding offer from Vale S.A. to acquire Metorex shares at R7.35 per share, which excluded Metorex's shareholding in Sable Zinc Kabwe, which was to be sold or unbundled for the benefit of Metorex shareholders as a condition of the Vale offer.
A circular to Metorex shareholders with regard to the Vale offer was posted to shareholders on 17 June, which provided details of the offer and provided notice of the general meeting, scheduled for Friday, 22 July, to consider and vote on the offer. "Good progress has been made in advancing the conditions precedent required to be fulfilled in terms of the Vale Offer," it said.
On 8 June, Metorex announced the disposal of its non-core interest in Sable to a subsidiary of Glencore International Plc for R190 million.
Then on 17 June, shareholders were advised that the Board had received an unsolicited, non-binding "expression of interest" from a bona fide party to acquire Metorex and today it received a firm intention to make an offer for 100% of Metorex from Jinchuan.
The Jinchuan offer represents a premium of 46% to the closing price of the shares on the JSE on March 25, being the last business day immediately prior to the date of publication of the first cautionary announcement wherein Metorex announced it had entered into discussions.
It also represents 58% to the volume-weighted average price of the shares on the JSE for the 30 trading days up to and including March 25 and 22% to the closing price of the shares on June 15 - the last business day immediately prior to the date of publication of the second cautionary announcement; and 24% to the volume-weighted average price of the shares for the 30 trading days up to and including June 15.
The independent directors of Metorex have retained KPMG Services as independent expert for the purposes of providing a report and opinion on the Vale offer. KPMG has furnished a preliminary opinion that it considers the Jinchuan offer to be fair and reasonable to shareholders and that the separate offer to the holders of options to acquire Metorex shares is comparable to the offer to shareholders.
"The board (and the independent board), acting in good faith and through the exercise of their fiduciary responsibilities, and after due consideration of the preliminary opinion prepared by KPMG, have determined that the Jinchuan offer would, if implemented in accordance with its terms, result in a transaction more favourable to shareholders than the Vale Offer and accordingly have deemed it a superior offer in relation to the Vale offer," Metorex said.
Metorex has notified Vale of the Jinchuan offer and that the board has considered it to be a superior proposal in relation to the Vale offer.
Vale has been afforded an opportunity for a period of eight business days to match or better the terms of the Jinchuan offer, and it may or may not decide to make an amended offer. The matching period will close by no later than 5pm on Friday, July 15, whereafter the board and the independent board intend to reconsider its recommendation of the Vale offer or, if applicable, consider any amended Vale offer and the Jinchuan offer.
Jinchuan retains the right to improve the offer and Metorex has not yet approved, recommended or entered into any agreement in relation to the Jinchuan offer.
Jinchuan is China's largest producer of nickel, cobalt and platinum group metals, as well as one of the top three producers of refined copper. Globally, Jinchuan is the fourth-largest producer of nickel and the second-largest producer of cobalt.
Jinchuan has an integrated business in non-ferrous metals from mining, refining and marketing to project engineering and mining equipment manufacturing, which helps achieve a competitive cost structure and rapid project development capabilities in the industry. Jinchuan conducts exploration, development and production of non-ferrous metals in more than 20 countries through subsidiaries, joint-venture companies and co-operative projects worldwide.
Jinchuan in Africa
Copper and Africa have been Jinchuan's two strategic focuses. With copper smelting and refining capacity already reaching 600,000 tons, Jinchuan is in the process of increasing its copper production base in southern China, which is specifically designed to receive and process imported materials in order to meet the rapidly growing Chinese market demand.
In Africa, Jinchuan has established its Johannesburg office as its regional headquarters to support investments and operations in SA, Zambia, the Democratic Republic of Congo and other countries.
If the Jinchuan offer is implemented, Jinchuan plans to establish Metorex as Jinchuan's integrated platform for the acquisition, exploration, development and operation of copper and cobalt projects in Africa.
Should the Jinchuan scheme be implemented, application will be made by Metorex to the JSE to terminate the listing of its shares.
Metorex, which produces copper and cobalt, has two operating mines - Chibuluma located in Zambia, in which it holds an 85% interest, and Ruashi in the Democratic Republic of the Congo (DRC), in which it holds a 75% stake.
These assets are located near two of Vale's central African copper projects - Konkola North, under development in Zambia, and Kalumines, under feasibility study in the DRC - which will enable Vale to exploit synergies.
The Konkola North and Kalumines projects are part of Vale's joint venture with African Rainbow Minerals.
Jinchuan also owns Wesizwe Platinum, for which it paid $878 million. In the year since the change of control, Wesizwe has made great strides in bringing its flagship project the Frischgewaagd-Ledig mine into production.
The group recently listed its mining arm Jinchuan Group International Resources on the Hong Kong stock exchange.
At the time of listing in February this year this state-backed group - which produces nickel, copper, cobalt, platinum, gold and silver - said the new listing would be a platform for the development of overseas mining resources and so facilitate its strategies to establish a multinational mining business and accelerate its overseas development.
http://www.businesslive.co.za/southafri ... le-s-offer
Mar 5 Juil 2011 16:05