PERTH (miningweekly.com) - ASX-listed Discovery Metals on Tuesday told shareholders it would continue to focus on its Boseto copper project, after Chinese bidder Cathay Fortune Investment (CFI) walked away from its A$824-million takeover offer for the company.

In its sixth bidder’s statement, CFI said it would allow its takeover offer for Discovery to lapse, citing that Discovery had breached the change of control clause for the offer, and stating that there had been a material adverse effect since the offer was made in November last year.

However, Discovery chairperson Gordon Galt told shareholders in a letter that the company had not breached a condition of the offer, since the change of control issue raised was covered in an existing clause in the Boseto project finance agreement with the company’s banking syndicate.

He noted that CFI had made no effort to understand the project finance arrangements and had insisted on maintaining the condition.

Furthermore, Galt said the material adverse effect cited by CFI represented less than 3% of the implied value of the offer, as opposed to the 10% usually applied as a market standard.

CFI had initially extended the takeover offer by seven days, saying it would evaluate a write-down in reserves at the Zeta openpit project, which forms part of Boseto.

In its second target statement, Discovery Metals indicated that an ore reserve model had overestimated the amount of sulphide ore and underestimated the amount of oxide and transitional ore in the Zeta openpit orebody, for the material mined to the end of December last year.

Galt also noted that Discovery had engaged with CFI, with the aim of clarifying the issues. However, CFI reverted to its demand for a due diligence, without any commitment to lifting the conditions of the offer.

He added that, as this was not in the best interest of shareholders, Discovery rejected this demand, and the bidder subsequently stated that it would allow the offer to lapse.