16/05/2008 - Indophil Resources NL shares surged to near record highs after Swiss giant Xstrata Plc launched a $426 million takeover bid.
Xstrata, the world's fourth largest copper producer, is Indophil's partner in the Tampakan copper and gold project in the Philippines.
The Swiss giant is offering $1 cash for each Indophil share, which will be financed through the company's existing credit facilities and cash on hand.
Xstrata has entered into a pre-bid acceptance agreement with Indophil's largest shareholder, Lion Selection Ltd, for its 17.76 per cent in the junior explorer, which increases the suitor's interest in Indophil to 19.99 per cent.
Lion Selection described the Xstrata bid as "attractive" and said it would tend a further 7.7 per cent stake in Indophil in the absence of a "better alternative".
Indophil has rejected the offer, labelling it as "unrealistically opportunistic" and "at a price that does not reflect the value of Indophil".
"This is yet another example of Xstrata opportunistically trying to pull off another low-ball bid for an Australian company," Indophil chief executive Richard Laufmann told reporters.
Indophil shares surged to an intraday high of $1.12 before pulling back to close 31 cents or 39.74 per cent higher at $1.09.
"People think that, given that Indophil has already rejected the offer that there will be an increased bid," Aequs Securities institutional dealer Ric Klusman told reporters.
"I think investors will probably hang off and see if Xstrata will come back with $1.20, or something like that, because it's not a massive move for Xstrata and they have plenty of room to move."
Indophil is the minority partner in the large Tampakan copper and gold project on the island of Mindanao, about 65 km north of General Santos City.
A pre-feasibility study for Tampakan's potential development is expected to be completed early in the third quarter of calendar 2008.
The company expects to begin development work by late 2012.
Production has been slated initially at more than 200,000 tonnes of copper and about 200,000 ounces of gold in copper concentrate a year.
Indophil earlier this year launched a takeover attempt for Lion Selection in a move aimed at ensuring that its largest shareholder did not its stake to help finance the acquisition of the Cracow gold mine in Queensland.
Lion Selection owns 30 per cent of Cracow, and there was market speculation that the group was raising the funds to pre-empt Beadell Resources making $200 million offer to Newcrest Mining Ltd for its 70 per cent balance of the mine.
But that speculation was scotched on Thursday after Lion Selection agreed to sell its stake to Beadell.
Xstrata Copper chief financial officer Luis Irvine said Indophil's move on Lion was the catalyst for its takeover.
Irvine dismissed Indophil's suggestion that Xstrata launched the takeover to "frustrate" Indophil's attempted takeover of its largest shareholder.
Irvine told reporters on Thursday that 100 per cent ownership of Tampakan would "increase the certainty and the simplicity" in the project's development and would provide "flexibility" for any joint venture arrangements.
Xstrata's bid, which is through its wholly owned subsidiary, Xstrata Queensland Ltd, requires Foreign Investment Review Board (FIRB) approval.
Source: AAP NewsWire
