Article in The Australian. Note the comments re Namibia being a...

Article in The Australian. Note the comments re Namibia being a 2nd string project which they'll get up and running after Wonarah. Will be interesting to see what implications that has for the JV and whether UCL makes a comment.

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Tim Boreham | March 05, 2009
Article from: The Australian
HERE'S a takeover situation more tight than a Tassie family renuion - but we can see the big-picture rationale behind the play.

Minemakers this morning launched its offer of one of its shares for every ten Bonaparte shares, valuing the latter at circa $7 million. A few minutes earlier Bonaparte surrendered its diamond ambitions by ditching alluvial diamond mining operation off the Namibian coast.

With the sparkle vanishing from the diamond market, Bonaparte for some months has been shifting its rhetoric to the potential of its 42.5 per cent owned marine phosphate deposit in the same area, boasting a JORC-compliant 196 million tonnes at 15.8 per cent purity.

The takeover makes for a boardroom scenario in that the companies each have five directors, three of who are common (Bonaparte chairman Ted Ellyard, Minemakers CEO Andrew Drummond and Minemakers finance director Dennis Wilkins).

Drummond says the merger aims to provide a second-string project after Minemakers gets its 460 million tonnes Wonarah project in the NT up and running.

“We believe we can raise the capital we need to get Wonarah into production next year,'' Drummond says. “We'll then use the money to get going in Namibia as an entirely second front.''

While accessing a submarine commodity sounds inherently more expensive than onshore mining, Drummond says it's just a matter of dredging the stuff up and sending it for processing. Unlike rock phosphate it doesn't need crushing and possibly may not require beneficiation.

Firstly, though, Minemakers needs to find $107 million of capital for Wonarah, at a time when fertiliser prices have dramatically reversed.

Drummond says the going rate of circa $US250 a tonne compares with Wonarah's projected cash costs of $US100 a tonne.

The Minemakers' offer values Bonaparte shares at 4.15c, a less than compelling discount to the 5.5c going rate. But excluding a $50 trade which pushed the target's shares up earlier in the week, the offer is at a 14 per cent premium to the 30 day weighted price.

Bonaparte holders - including some UK insto groupies impressed with Ellyard's record as head of Hardman Resources - can decide for themselves. But we reckon they might as well pool resources into a super-phosphate play.

Drummond says Bonaparte is not “on the bones of its bum'', but with a dwindling share price and only $2 million of cash it's Waterloo time.

Bonaparte investors should "hold". Minemakers is a "speculative buy".


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