Mercantile says Phosphate Australia offer is final
PERTH (miningweekly.com) – ASX-listed Mercantile Investment on Friday warned the shareholders of takeover target Phosphate Australia that it would not further increase its takeover offer, saying that the company’s shares were “simply not worth” the 15.6c each estimated by an independent expert.
Mercantile earlier this week raised its offering price from 2c to 2.2c a share in cash, an offer which the directors of ASX-listed Phosphate Australia again rejected.
While Phosphate Australia directors remained adamant that the Mercantile offer undervalued the company, and that shareholders were unlikely to benefit from the future development of the Phosphate Australia projects should the takeover offer proceed, Mercantile has pointed out that these projects would require significant capital investment.
“Phosphate Australia has been trying to sell its flagship Highland Plains project without success. Mercantile understands that the Highland Plains project requires significant investment of more than A$400-million to construct its mine and any pipeline to the coast, while Phosphate Australia’s other projects have not produced any precious metal in seven years,” Mercantile said.
Phosphate Australia has maintained that the Highlands Plains project, in the Northern Territory, which had an inferred resource of some 53-million tonnes, was considered one of the best phosphate projects in Australia, as it had a defined resource and was close to existing infrastructure and potential transport solutions.
Mercantile’s takeover offer would close on May 14.
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