Iluka drops bid for Kenmare

PERTH (miningweekly.com) – After more than a year of negotiations, mineral sands miner Iluka on Monday announced that it had abandoned its takeover bid for Irish miner Kenmare Resources, as the target’s largest shareholder had indicated that it would not support the transaction.

Iluka said that the interests held by the largest Kenmare shareholder was of a size such that it alone could likely prevent the implementation of the acquisition.

Iluka has revised its offer for Kenmare, which owns the Moma mine in Mozambique, several times since its first proposal of 0.036 shares for every Kenmare share was rejected in June 2014.

At the end of April this year, Iluka revised its nonbinding proposal to 0.016 Iluka shares for each Kenmare share.  By November, the offer had again been lowered, this time to 0.007 Iluka shares for every Kenmare share, as Iluka’s board reassessed the value of Kenmare, based on the deteriorating global market, and a recent significant drop in sulphate ilmenite prices.

Iluka MD David Robb said on Monday that the proposed transaction with Kenmare was pursued consistent with Iluka’s objective of creating and delivering value for shareholders.

“It was also consistent with the company’s disciplined, diligent and patient approach. Iluka recognises that value creation for shareholders over time requires a business which exhibits profitability, sustainability and growth. The company also recognises that growth typically requires an element of prudent risk-taking.”

Robb added that Iluka was of the view that for Kenmare’s Moma operation to achieve its financial potential, the application of Iluka’s technical competence, along with its market knowledge, access and reach, and balance sheet capacity would have been necessary.

“Iluka considered that its technical capability and experience could have enhanced significantly the operational and thus financial performance of the Moma operation.”

Iluka chairperson Greg Martin expressed disappointment that Kenmare shareholders were unwilling to participate in the transaction.

Kenmare told its own shareholders on Monday that the company’s focus was now on securing the independent future of the company in the interest of all its stakeholders.

Instead of a transaction with Iluka, Kenmare would pursue a capital raising and debt restructuring to provide the company with a sustainable platform for future operations.

A sovereign wealth fund of the Sultanate of Oman has in-principle approved an investment of $100-million in Kenmare, subject to a subscription agreement, agreement of arrangement with the group’s lenders, procurement of commitments from shareholders for an additional minimum $75-million capital, shareholder approval and the finalisation of a prospectus.