Guangdong Rising Assets Management Co., Makes $1.4B Bid for Miner PanAust
The long time supportive shareholder of Miner PanAust, Guangdong Rising Assets Management (GRAM), is heating things up. The 23 per cent shareholder is making for a bit of a volatile trading scene with its proposal of a $1.4 billion (A$1.5) takeover bid.
Initial share prices were marked at $2.20 and have now risen to $2.30 per share in the discussions that have since followed the Guangdong Rising Assets Management (GRAM) proposal.
This takeover bid might be able to gain even greater traction and strength seeing as PanAust has reported that the bid itself has already materially undervalued its copper and gold assets.
The proposal from 23 per cent shareholder, Guangdong Rising Assets Management (GRAM), initially started at A$2.20 a share, and was increased to A$2.30 a share in subsequent discussions. Guangdong Rising Assets Management Co. is a state-owned Chinese investment group, and offered to take control of PanAust Ltd. makes for yet another aggressive move made by China within the world marketplace.
Guangdong Rising’s proposed offering of A$2.30 per share in the conditional proposal represents a 46 percent increase from the last close experienced by PanAust. Even with the significant increase over the last closing price, there was some hostility experienced when PanAust declined on the offer, stating it was too low. However, PanAust did concede in providing Guangdong Rising with access to its financial information. These events combined to influence the market in a way that led to an increase of 35 percent today in Sydney trading.
If Guangdong Rising is allowed to purchase PanAust, they would win control of Laos based mines. They would also gain control over the Frieda River project in Papua New Guinea. The Frieda River project is considered one of the world’s largest undeveloped copper and gold deposits, which could give PanAust significant support in asking for a higher share price. PanAust agreed last year to buy Glencore Xstrata Plc (GLEN)’s stake in Frieda River, estimating the development costs at as much as $1.8 billion.
“It’s probably more likely those projects will go ahead under a new ownership,” commented Gareth James, a Sydney-based analyst with Morningstar Inc. A leading challenge that PanAust could be up against is the pursuit of sufficient funding for these projects. However, on the flip side, Guangdong Rising “can just go ahead with those projects as they have access to capital, and that removes the uncertainty,” said James.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.