Tuesday, May 27, 2008 Xstrata wants to buy Indophil stake
TAMPAKAN, South Cotabato -- Major global mining player Xstrata Copper has expressed intention to buy out the stakes of junior partner Indophil Resources NL at a copper and gold project here stiffly opposed by the local Catholic Church.
Indophil, however, immediately rejected the offer.
Xstrata's cash offer was priced at a 28 percent premium to the closing price of A$0.78 per Indophil share on the Australian Securities Exchange last May 14, and a 29 percent premium to the volume weighted average price of Indophil shares over the last month on the Australian bourse. The offer will be financed through Xstrata's existing credit facilities and cash on hand.
In a statement, Charlie Sartain, Xstrata Copper chief executive, said the offer would have enabled Xstrata to increase its interest in the issued common shares of Sagittarius Mines, Inc., the holder of the Tampakan project, to 100 percent.
"This offer represents a highly attractive premium to Indophil's current share price and gives its shareholders an immediate opportunity to realize a cash value for their investment without the risks inherent in developing a project of this scale," Sartain said.
"The decision by Indophil Resources' largest shareholder, Lion Selection, to accept Xstrata's offer in respect of 17.76 percent of the shares in Indophil confirms the attractive value proposition offered," he added.
Indophil's flagship asset is its 34.23 percent interest, with a right to acquire an additional 3.27 percent, in the Tampakan copper project in the southern Philippines. Xstrata Copper has management control and holds 62.5 percent of the issued common shares in Sagittarius.
Richard Laufmann, Indophil Resources chief executive officer and managing director, said their board considers that the Xstrata approach is "unrealistically opportunistic" and is at a price that does not reflect the value of Indophil.
"As a result, the Indophil Board has not agreed to recommend the Xstrata approach and it has not entered into any agreement with Xstrata," Laufmann said in a separate statement.
Xstrata has indicated that it makes no representation as to whether it would make a takeover offer for Indophil, or the terms of any such offer, should the pre-conditions not be satisfied. Accordingly, the status of the Xstrata approach is uncertain.
Nevertheless, the approach from Xstrata is clear evidence that the company, as the manager and 62.5% interest holder in the Tampakan project, appreciates the huge value that Indophil's shareholders stand to realize from Indophil's participation in the development of the Tampakan project, Laufmann said.
The Tampakan project straddles the towns of Tampakan in South Cotabato, Columbio in Sultan Kudarat and Kiblawan in Davao del Sur.
Bishop Dinualdo D. Gutierrez has renewed calls for a stop to the mining venture on concerns on the environment, human health, and food security. (BSS)
