re: lsg running hard on sed takeover
AuSelect bids for explorer Robin Bromby July 15, 2006 LISTED mining investment fund stablemates Lion Selection Group and AuSelect are going to shed their lookalike status, with AuSelect dipping its toe directly into the mining waters.
The company has made an unsolicited bid for Sedimentary Holdings, an explorer whose main asset is a 30 per cent stake in the Cracow gold mine in Queensland, operated by Newcrest Mining. That brought in just under $12.5 million last year.
This takeover represents a change of strategy for the funds run by former JBWere analyst Robin Widdup.
His policy has been to identify explorers with advanced projects that need a financial boost to get them into production.
Lion, for example, owns substantial stakes in companies such as Allegiance Mining, De Grey Mining and Exco Resources, while Austindo backs local explorers as well as Australian companies operating in Indonesia and the Philippines and the African Lion fund. But previously neither had sought to take control of any companies in their portfolios.
AuSelect owns 2.1 per cent of Sedimentary with Lion Selection holding a critical 23.7 per cent. The unsolicited scrip offer values Sedimentary at 30c, and traders edged the stock up 8c to 29c yesterday.
The offer is two AuSelect shares for every nine Sedimentary, and Lion Selection has agreed to sell part of its interest, equalling 17.8 per cent of Sedimentary.
The target company said its board would consider the offer and told shareholders to take no action. But AuSelect's plans for the company are still under wraps and there is no indication of how Mr Widdup and his team will shape the new mining arm.
All Mr Widdup would say was that Sedimentary's aggressive exploration program for small gold deposits would be phased out: "These are all such long shots."
This would include a new project announced as recently as Thursday, when Sedimentary said it had been granted tenements including the old Lord Nelson mine near the central Victorian town of St Arnaud.
Mr Widdup said ending exploration would save $3million or more.
"We get direct access to the cash flow without having to spend management time on it," he said.
LSG Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
