Metro bids for unlisted Gulf to create leading Cape York bauxite firm

PERTH (miningweekly.com) – Bauxite developer Metro Mining on Wednesday announced its intention to make a takeover offer for unlisted Gulf Alumina, to create a leading independent Cape York bauxite company.

Gulf holds about 2 000 km² of partially drilled bauxite mining tenements and rights in the Cape York peninsula, in northern Queensland, and a further 320 km in the Northern Territory.

Gulf was aiming to develop a three-million-tonne-a-year operation at its Skardon River tenements, ramping up to five-million tonnes a year of direct shipping ore (DSO).

Metro chairperson Stephen Everett said that the logic of the combination of the two companies was “clear and compelling”.

“Metro’s and Gulf’s adjacent bauxite development projects at Skardon River are complementary, given their similar scale, mining and export methods. By combining the two projects, we will create value well in excess of what is achievable on a standalone basis.”

Everett said that opportunities included the removal of duplicated capital and operating costs, operational efficiencies, a simplified permitting process and an enhanced position for the combined group to secure product sales and financing on improved terms.

“The transaction will create an attractive company and investment proposition for both existing and new shareholders,” he added.

Under the offer, Gulf shareholders would receive 3.3 new Metro shares for every one gulf share held, with Gulf shareholders owning a combined 44% of the enlarged company.

The offer was subject to a number of conditions, including a 50.1% minimum acceptance condition.

Metro had entered into a pre-bid acceptance agreement with Gulf shareholders Joyday and Equity & Permanent Investment Capital, which hold a 17.1% interest in the takeover target.

The pre-bid acceptance agreement would require the shareholders to accept the offer within three business days of it being opened for acceptance, subject to there being no superior proposal within five business days of the date of the agreement, in which case Metro would have the opportunity to increase its offer consideration.

“It is pleasing that the merits of our offer have been recognised by Gulf’s largest and key founding shareholder, and we look forward to formally making our offer to Gulf shareholders in due course,” Everett said.

A formal offer would be dispatched to Gulf shareholders later this month.

Metro this year completed a definitive feasibility study into its Bauxite Hills mine, which estimated that the project could deliver about two-million tonnes of DSO product over a 25-year mine life.

The project was estimated to cost some A$33.9-million to develop.