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Takeover bid still a goer: ConsMin

Paul Garvey
Monday, 16 April 2007

CONSOLIDATED Minerals managing director Rod Baxter has again defended the bid of Brian Gilbertson's Pallinghurst Resources, following claims from the company's ex-advisor that the bid was "heading for the rocks".




Numis Securities, which was the broker and nominated advisor regulating ConsMin's London listing before its sudden resignation soon after the Pallinghurst deal was announced, said on Friday it had upgraded its target price for ConsMin to 146p, or around $A3.65.

"Brian Gilbertson and the team at Pallinghurst may need to revise their offer for Consolidated Minerals as the shares rise above the effective 96p ($2.40) offer," Numis said.

Pallinghurst – headed by former BHP Billiton head Gilbertson – is offering $1.38 cash plus two shares in the new ConsMin for every five currently held. The per-share value of the bid, which had a notional value of $2.28 per share when it was launched, was $2.448 in morning trade based on the current price of $2.67.

Speaking to MiningNews.net, Baxter said he did not agree with Numis' suggestion that the Pallinghurst bid was in trouble, adding that a recent road show through Australia, North America and Europe had met with a favourable response, particularly from larger institutional investors.

In addition, Baxter pointed out that the two-for-five share component of the offer meant shareholders could participate in the upside of the new ConsMin.

"That was the whole essence of this transaction," Baxter said.

"We wanted to give shareholders exposure to the upside in the ConsMin growth story going forward. As the share price moves up as people become more comfortable with the offer, the value of the offer also rises."

Baxter added that both Gilbertson and Hans Mende – the head of private coal group AMCI, Pallinghurst's partner in the ConsMin bid – would be arriving in Australia soon for another series of road shows to Australian investors.

Baxter also dismissed suggestions that the market update issued by the company on the Thursday afternoon before the Easter break was a response to mounting pressure from the shareholders behind a website urging ConsMin investors to vote against the Pallinghurst offer.

The Consolidated Minerals Takeover – Vote No website has used reported rallies in the manganese and chromite markets as justification for its opposition to the bid.

However, Baxter said the market update was consistent with its continuous disclosure policies.

"We consistently said when the new management took over we would continue to look at our ongoing disclosure obligations, and share with our shareholders what's happening with the company," Baxter said.

Baxter said that a fall in manganese stockpiles in China had driven a slow uptick in the manganese market, although that had been partially countered by rising shipping costs and a strengthening Australian dollar.

ConsMin is increasing FOB manganese prices to rise by 8-10% on the $US2.09/dmtu received in the first half of financial 2007.

Chromite prices, meanwhile, are now expected to increase by around 6% on the $US148/t received in the first half.

ConsMin shares were up 2c to $2.67 in morning trade today.