Elemental receives nonbinding offer from Hong Kong investment firm
PERTH (miningweekly.com) – Minerals explorer Elemental Minerals has received a nonbinding takeover offer of A$0.66 a share from Hong Kong-listed investment firm Dingyi Group Investment.
The offer valued Elemental Minerals at around A$160.8-million.
The offer price represented a premium of 126% to the volume-weighted average price of Elemental shares over the last 20 trading days.
The company said on Friday that a formal offer was subject to a number of preconditions, including the completion of a due diligence, Elemental board recommendation, and the receipt by Dingyi of undertakings from shareholders holding 13.6% of the issued shares to accept any formal offer.
If a formal offer was made, it would be subject to a 50.1% minimum acceptance condition, as well as regulatory approvals.
Elemental told shareholders on Friday that its board was of the unanimous view that the proposal should be progressed to determine its capability of being put forward to shareholders in a binding form.
The ASX-listed explorer has now entered into an exclusivity- and cost reimbursement agreement with Dingyi in terms of which it would grant the company until May 11 to complete its due diligence and negotiate definitive documentation.
In March this year, Elemental launched a hunt for a possible joint venture partner to develop its Sintoukola potash project, in the Republic of Congo.
A prefeasibility study into the project has shown that it could deliver some two-million tons a year of muriate of potash, and the underground operation was expected to have a mine life of some 23 years. The project could be developed at a total capital cost of $1.85-billion, and would have a net present value of $2.9-billion, and an internal rate of return of 29.3%.
Elemental was targeting initial potash production by 2017 and to reach full capacity in 2018.
The company’s share price skyrocketed by nearly 33% on Friday to trade at a high of A$0.55 a share.
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