16/05/2008 - Lion Selection Group Ltd is expected to announce the proposed use of funds from the sale of its stake in Newcrest Mining Ltd's Cracow gold mine in Queensland and its shareholding in takeover target Indophil Resources NL as soon as on Friday.
Lion Selection surprised the market on Thursday by agreeing to sell its 30 per cent interest in Newcrest Mining Ltd's Cracow gold mine in Queensland to Beadell Resources Ltd for $80 million, after earlier indicating that it aimed to move to full ownership of the mine.
Lion Selection, a resource investment company and Indophil's largest shareholder, surprised the market further when it entered into a pre-bid acceptance agreement with Swiss mining giant Xstrata plc, which on Thursday launched a $426 million takeover for Indophil.
Xstrata and Indophil are partners in the Tampakan copper and gold project in The Philippines.
Ironically, Indophil's $340 million takeover bid for Lion Selection is a move speculated to prevent its target from selling off its 25.4 per cent stake in Indophil to help finance the acquisition of the Cracow mine.
Lion Selection recently said it aimed to become a mining company and exercise a pre-emptive right to acquire the remaining 70 per cent interest in the Cracow mine.
But early last month, Newcrest entered into a conditional agreement with Beadell to sell its 70 per cent stake for $200 million.
"The Lion board has considered the various alternatives, including exercising its pre-emptive right and moving to become a mining company, and decided that it is in the best interests of Lion shareholders at this time for Lion to sell its 30 per cent interest," Lion Selection said in a statement on Thursday.
A Lion Selection spokesman told reporters that an announcement regarding the company's future direction and the use of its now considerable funds could hit the market as soon as on Friday.
Under the conditional sale and purchase agreement with Beadell, Lion will receive $65 million in cash and $15 million in Beadell shares.
"Lion believes the consideration offered by Beadell for its Cracow interest is attractive and represents a premium to the cost base of Lion's investment," it said.
The sale is subject to several conditions, including Beadell achieving an equity raising of up to $235 million to fund the acquisition of 100 per cent of Cracow from both Lion and Newcrest.
It is expected the sale will be complete by the end of this fiscal year.
Lion has agreed to provide Newcrest with an option to acquire Lion's 30 per cent interest in Cracow for $80 million in cash, should Beadell not complete the two purchases.
Source: AAP NewsWire
