Xstrata pushes takeover bid for Tampakan project
26-JUL-2008 Intellasia | Sun Star
Jul 26, 2008 - 7:00:00 AM
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XSTRATA Copper urged anew Indophil Resources NL shareholders to accept its offer to eliminate funding risks for the Tampakan copper and gold project.
Charlie Sartain, Xstrata Copper chief executive officer, asked Indophil shareholders to accept its 100% cash offer of Au$1.28 per Indophil share.
"[Accepting our offer] eliminates funding risk for you, as an Indophil shareholder. Indophil's share of capital expenditure for the Tampakan project may require over US$1 billion of capital to be raised by Indophil over the next three to five years, including thorough rights issues and/or placements, should the Tampakan project proceed," Sartain said in its final bidder's statement posted at Indophil's website on Wednesday.
Sartain added that it is Xstrata's view that the potential development of the Tampakan project has higher prospects of success with a different ownership structure than currently exists with Indophil as a minority partner.
He said the ownership structure has important implications in regard to the project's development timetable, financing arrangements, market position and value.
However, Indophil asked its shareholders to take no action in relation to Xstrata's offer.
Xstrata's offer is open for acceptance until 7 p.m. (Sydney time) on August 15, 2008, unless extended.
Indophil cited there are currently two offers for the company's shares at Au$1.28, the other being that of the consortium consisting of Hong Kong-based Crosby Capital Ltd and Filipino firm Alsons Corp.
Xstrata initiated the intra-corporate bidding war by first offering Au$1 per share to buy out all the stakes of Indophil in the Tampakan project.
Crosby later on offered Au$1.28 per Indophil share, which Xstrata eventually decided to match.
Indophil owns 32.5% of the Tampakan project with an agreement to lift it up to 37.5%. Xstrata Copper, which exercises management control over the project, owns the other 62.5%.
The Tampakan project, pursued through the local firm Sagittarius Mines Inc., potentially contains two billion tonnes of mineral deposits, containing 11.6 million tonnes of copper and 14.6 million ounces of gold at a 0.3 copper cut-off grade. It is said to be the largest undeveloped copper deposit in Southeast Asia.
Asked if their shareholders will not act on Xstrata's offer, the Indophil's independent directors said it is likely that either one or both parties will further increase the offer.
They said if they will accept Xstrata's offer, they would not be able to sell their shares at the Australian Stock Exchange.
Indophil's share price closed at Au$1.315 last Wednesday, a company statement said.
Last June 23, Xstrata Copper's bid to wrest full control of the Tampakan project suffered a defeat after shareholders of Lion Selection, the largest shareholder at Indophil, rejected Xstrata's bid with respect to 17.7% of Lion's 25% holding in Indophil.
Some 55.63% Lion shareholders voted against the bid of Xstrata in a voting that was not carried as an ordinary resolution, compared to 44.37% in favour, a document showed.
Xstrata's bid at Lion was seen as a prelude to a total takeover of the Tampakan project from Indophil.
The Tampakan project, which is vehemently opposed by the local Catholic Church, straddles the towns of Tampakan in South Cotabato, Columbio in Sultan Kudarat, and Kiblawan in Davao del Sur.
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