The concern about silence being bad news is potentially misguided. FIRB decisions can take over 90 days, with 30 days being just a guideline (see Notes 1 and 2 below), so the companies are likely just waiting for this approval. I'd argue the silence is standard and not a negative signal.
The share price is down due to:
1.
Deal Risk - Concerns the deal will be rejected by FIRB have been apparent from the start, which helps explain some of the disparity to the offer price
2. Capital Allocation - Investors are worried over how the capital will be allocated, with around $74M free but over $6M being allocated to exploration (based on CZR's latest quarterly report), causing fears that these funds could be further diluted towards potentially unsuccessful exploration spend
3.
Payment Delay - The time delay in receiving the additional $20M payment
The argument that silence is bad is missing the point. FIRB approval is a complex process that takes time, and silence simply means the process is ongoing.
The real question is why Miracle Iron wouldn't want to extend the offer. Given the favorable iron ore outlook and their long-term strategy, extending makes sense. They are incentivised for this deal to succeed because that’s why they initiated the transaction from the outset, and there is nothing to suggest they want to pull out.
Extending the offer ensures the deal has the best chance to succeed, aligning with both parties' objectives.
Note 1. Once a FIRB application is lodged and the fee is paid, the Treasurer generally has 30 days to make a decision and an additional 10 days to notify the applicant. If no decision is made within this period, no further orders can be made to prohibit or unwind the transaction. However, several factors can extend this timeframe:
(1) Information Requests - The review clock stops until the requested information is provided.
(2) Interim Orders - The Treasurer can issue an interim order to temporarily prohibit a transaction for up to 90 days, extending the decision time.
(3) Unilateral Extensions - The Treasurer can extend the review period by up to 90 days beyond the interim order.
(4) Applicant Requests - Applicants often request extensions when FIRB needs more time, which is common to avoid a public interim order or rejection.
See for more details: Overview of Australia's foreign investment approval (FIRB) regime (allens.com.au)
Note 2. In 2022-23, about 30% of applications took more than 61 days, and over 60% took more than 31 days. Despite the statutory period, there is no guaranteed timeframe for FIRB approval. You can see the link to the attached chart here: Quarterly Report July-September 2023.
See for more details: https://foreigninvestment.gov.au/si...02/quarterly-report-july-september-2023_0.pdf
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