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.
Gerald Group resolves iron ore dispute with Sierra Leone
Gerald Group, the US commodity trader, will pay Sierra Leone $20mn and cede a 10% stake in an iron ore project as part of the resolution to a nearly two-year dispute that led to the shutdown of production, the two sides revealed.
Gerald's wholly-owned subsidiary SL Mining filed for arbitration in August 2019 over a royalty payment dispute and suspended the Marampa mine the following month. Sierra Leone's government responded by cancelling its mining licence.
As part of the agreement signed on Friday, Sierra Leone will take a non-dilutable 10% stake in a new company that will replace SL Mining and resume operations at Marampa by June 1, Gerald said in a statement.
Gerald will make two $10mn payments this year and will have the immediate right to ship its current stockpile of about 707,000 tonnes of iron ore, it said.
Both sides will withdraw their legal claims before the International Chamber of Commerce (ICC) and International Centre for Settlement of Investment Disputes (ICSID), the statement added.
Gerald’s chairman and CEO Craig Dean commented: "I am delighted that we have been able to resolve our differences and have a fresh start and new beginning with the government of Sierra Leone."
Sierra Leone's Mines Minister Timothy Kabba told a news conference on Tuesday that the agreement was a milestone for the country.
"Whatever the pain we may have borne or dreaded throughout these two years ... this outcome justifies our action," he said.
Gerald estimates that Marampa holds about 1 billion tonnes of iron ore with a potential lifespan of 30 years.
Back in 2019, Dean spoke with Mining about the development of Marampa and commented: "SL Mining offers a substantial opportunity for Gerald Group as our Marampa mine in Sierra Leone is producing two million tonnes per annum of high grade iron ore in the first phase of development, with expansion possibilities of greater than six million tonnes per annum of high-grade iron ore during its operational life. If you analyse the iron ore market it has transformed, even from a couple of years ago when prices were very low. Now prices have stabilised we’re in a favourable position with our first shipments leaving for China.
"Our goal is to make ‘Marampa Blue’ an internationally recognised premium grade iron ore brand. We intend to expand the delivery of high-grade 65% iron ore concentrate to markets in Europe and Africa.”