Todd makes another play for Pilbara iron-ore project

PERTH (miningweekly.com) – New Zealand’s Todd Corporation has made another play to gain hold of the Pilbara iron-ore project, in Western Australia, this time offering to acquire owner Flinders Mines in an unconditional all-cash off-market takeover offer.

Flinders shareholders in September last year rejected a A$65-million acquisition offer from Todd Corporation to gain ownership of the Pilbara iron-ore project.

The two companies had in May last year signed an option agreement, which would have seen Flinders receive an initial A$10-million up-front payment in consideration for the transaction, and a further A$55-million if Todd exercised its option over the Pilbara iron-ore asset.

Not to be dissuaded from its aim of owning the Pilbara iron-ore operation, Todd had now launched a takeover offer for Flinders, offering shareholders 1.3c a share in cash for their holding in the ASX-listed company.

The offer price was more than two-and-a-half times the price at which Flinders issued shares under a private placement in early March, Todd pointed out, and represented a 63% premium to the closing price of the company’s shares on March 16.

The offer also represented a 71% premium to the 30-day volume weighted average price of Flinders shares.

In its offer to Flinders shareholders, Todd noted that the recent uncertain and volatile iron-ore market conditions, and a lack of an existing transportation infrastructure solution made the development of the Pilbara iron-ore project by Flinders “very challenging”.

Todd expressed its opinion that Flinders would likely need to raise additional funding in the near to medium term to fund its corporate overheads and to maintain its projects in good standing, even if no progress was made in the development of the Pilbara iron-ore project.

Further, Todd noted that even if Flinders overcame the challenges of the uncertain iron-ore market and the lack of access to transportation infrastructure, the company still required additional funding to restart the existing bankable feasibility study (BFS) and to take the project into production once a final investment decision was made.

Flinders in June last year suspended the BFS at the project in an effort to conserve cash while shareholders considered the option agreement from Todd.

The ASX-listed company on Thursday asked shareholders not to take any action around the Todd offer, saying that the company directors were considering the offer and would make a recommendation in due time.

The offer was expected to remain open for one month, unless extended or withdrawn.