Friday, November 07, 2008 Indophil bid war gets ugly By Edwin G. Espejo
GENERAL SANTOS CITY -- The bid of Alsons Corporation to corner the minority shares of Indophil Resources NL at the rich Tampakan Copper and Gold Project appears to be headed towards a corporate showdown with Swiss mining giant Xstrata Plc.
Its subsidiary in Australia, Xstrata Copper based in Queensland, Australia has announced it would likely question a proposed deal that would have the Filipino conglomerate eventually own 37.5 per cent of Sagittarius Mines Incorporated.
In a statement, Xstrata Copper chief executive officer Charlie Sartain they "are not prepared to give the Indophil Board free rein to sell the company only major asset at an undisclosed price and on undisclosed terms."
Xstrata holds 62.5 per cent of SMI, effectively giving it management and operational control over the Tampakan-based mining company.
In September, Alsons Corp. submitted a bid offer to buy the 34.23 per cent stake of Indophil Resources NL at SMI for AUS$1.28 per share after a Hong Kong-based consortium of potential bidders backed out when Xstrata bought out substantial shares held by Lions Selection in Indophil.
Alsons owns the remaining 3.27 per cent of Indophil.
The Indophil management has agreed in principle to accept the Alsons' offer, which will be submitted for approval on November 12, when the stockholders of the Australian mining firm holds its general assembly meeting.
Indophil managing director and chief executive officer Richard Lauffman however said they were not surprised with Xstrata's "announced intention to vote against the sale" of their stake at SMI.
"Xstrata's position is not surprising, given its previously unsuccessful takeover attempt on Indophil," Lauffman said in a statement posted on its website.
He likewise refuted the claims of Xstrata that the proposed sale of Indophil stakes at SMI will "expose(s) shareholders to potential loss of value."
"The Indophil directors reiterate that they will only agree for Indophil to dispose of an interest in the Tampakan Project for a consideration which is at least consistent with that offered by Stanhill under its lapsed bid for Indophil, and otherwise on a basis consistent with shareholders' best interests," the Indophil statement further read.
In April this year, Xstrata attempted to take over Indophil by offering to buy the mining company at AUS$1.00 per share.
Indophil, however, rejected the offer, saying the quoted price was way below the fair market value of its shareholdings.
Months later, Stanhill Resources tendered an offer to buy Indophil at AUS$1.28 per share.
In September, however, Xstrata bought the 17.76 per cent of Indophil held by Lions Selection, effectively voiding Stanhill's bid offer as it contains a 90 percent delivery rider.
The same month, Alsons submitted its own bid to buy out shares held by Indophil at SMI.
Alsons has yet to comment on the statement issued by Xstrata although the latter said it would welcome the Filipino group's increased participation in the Tampakan Copper and Gold Project.
Indophil has other projects in both the Philippines and Australia other than its stake at SMI.
With ore deposits of over 12.8 million tons of 0.6 per cent copper and 15.2 million ounces of 0.2 grams per ton of gold, the Tampakan Copper and Gold Project is reportedly the biggest of its kind in Southeast Asia and the Western pacific region.
Its financial technical assistance agreement (FTAA) was first owned by Western Mining Corporation, which abandoned the project in the late 90's, after facing strong opposition from environmentalists and the Catholic Church here.
WMC sold its rights to Indophil in 2002, which in turn sought financial backing from Xstrata.
In 2007, Xstrata exercised its option over the project and strengthened its position in the company by cornering 62.5 per cent of the SMI.
