BARRY FITZGERALDNovember 27, 2009 - 12:37PM .Melbourne-based...

BARRY FITZGERALD
November 27, 2009 - 12:37PM .

Melbourne-based Indophil Resources is negotiating its sale to Chinese interests in a deal that could be worth $550 million.

The stock has gone in to a trading halt pending completion of a "potential material corporate transaction."

The group has previously flagged that it was close to securing the sale of its 34.23 per cent stake in the world-class and Xstrata-managed Tampakan copper/gold project in the southern Philippines.

The Tampakan interest is Indophil's only significant asset. As a result, the cleanest and most tax efficient way for the potential buyer to acquire the interest would be through a layered deal that takes out Indophil itself.

Shares in Indophil last traded at $1.085 a share, valuing the company at $426 million. The suggested sale price of $550 million is based on a standard 30 per cent takeover premium.

Xstrata is the managing partner in the project with a 62.5 per cent interest. It recently upgraded the resource estimate to 13.5 million tonnes of copper and 15.8 million ounces of gold.

The partners have been working towards a $US5.2 billion development that would begin production in 2016 at an annual rate of 340,000 tonnes of copper and 350,000 ounces of gold.

Xstrata owns 19.9 per cent of Indophil, a legacy of a failed takeover bid last year. It is expected to welcome an ownership change at Indophil, particularly as the incoming Chinese partner will have access to capital, as well as being a likely buyer of the mine's copper concentrates.

Indophil chief executive Richard Laufmann was not available for comment on the looming deal. He said recently that "Tampakan stands out as one of the world's best near-term undeveloped copper deposits."

Xstrata expects to complete a feasibility study into Tampakan's development in the first half of 2010.

"We are committed to advancing the Tampakan project in genuine partnership with our joint venture partners, the Philippine Government and authorities, local institutions and our neighbouring communities," Xstrata said recently.

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The Age

http://www.businessday.com.au/business/indophil-negotiates-sale-to-chinese-20091127-jvy1.html