Moly says new Metro offer superior to Gulf Alumina’s

PERTH (miningweekly.com) – ASX-listed Moly Mines has increased its offer for takeover target Gulf Alumina, to rival a bid from fellow-listed Metro Mines.

Moly Mines in September launched a combination of A$0.46 in cash and 1.4 options for each Gulf share held, with the company revealing plans to progress Gulf’s Skardon River project, in Queensland, into production as “soon as possible”.

However, Metro Mining, which holds a 39% stake in Gulf, launched a competing bid, offering Gulf shareholders a choice of 60c in cash a share, or a cash and shares alternative of 50c in cash and one metro share for each Gulf share held.

Moly Mines on Wednesday had offered an all cash consideration of 63c for each of the Gulf shares held, or 46c cash and 1.14 Moly shares for each Gulf share held, valuing Gulf shares at 63c each.

The participation in the cash-only option will be subject to the total cash consideration not exceeding A$42-million. If Moly is unable to satisfy all cash-only option elections from the cash pool, a scale-back mechanism will be applied to allow participating shareholders to receive the cash and share option for any Gulf shares that are not able to be acquired for cash only.

Gulf shareholders who hold fewer than 250 000 shares will receive priority access to the cash-only option.

The ASX-listed company will also amend its conditions precedent, and is in discussions with the Foreign Investment Review Board and stock exchange in order to obtain the necessary confirmations and approvals for the increased offer.

Moly said Wednesday that its offer was superior to the Metro Mining offer, which would be funded using wholly borrowed funds and exposing Gulf shareholders to an uncertain future as shareholders in Metro. Moly would fund its cash component from existing cash resources and only minimal debt.