mining wekly

PERTH (miningweekly.com) − Base-metals explorer Copper Strike is likely to pull off its Einasleigh joint-venture (JV) agreements with its new Chinese partners despite major shareholder Kagara not supporting the development plan, an analyst said on Thursday.

Kagara ended up with a 17,5% shareholding in Copper Strike, after its 11c a share takeover offer closed without much interest from Copper Strike shareholders.

Copper Strike asked shareholders to disregard the bid in favour of a JV development of Einasleigh, under which Being Jintai Yuanchung Mining (Jintai) and Taifeng Yuanchuang International Development (Taifeng) have agreed to invest A$5,82-million for a 19,99% stake in the company, with an option to take another 13%, for A$5,64-milliion.

Taifeng also agreed to jointly develop the Einasleigh project with Copper Strike, should the bankable feasibility study (BFS) confirm the currently estimated recoverable resource, production costs and development costs for the key deposits.

Taifeng would provide A$95-million by way of a farm-in for a 70% interest in the Einasleigh tenements and would then provide a further A$5-million loan to Copper Strike.

However, Kagara MD Geoff Day said that the company � as a major shareholder � would not support the JV development plans for the Einasleigh project.

�I would think that the majority of shareholders would support the [JV development] plan, because they want to see this project developed,� said senior resources analyst for MineLife, Gavin Wendt.

Wendt told Mining Weekly Online that bringing the Chinese on board was an �ideal� way to develop the Einasleigh project. �What it will do is to keep the dynamic tension in the company, because you will still have Kagara as a major shareholder, but you will also have the Chinese coming onto the register. So really, it is probably a good outcome for Copper Strike shareholders.�

However, Wendt noted that had Kagara been willing to bid more than its 11c a share, the ASX-listed company could likely have succeeded in its tie up.

�As far as I�m concerned, the offer never had enough of a premium in it. And I think that was reflected in the fact that it was unsuccessful, although Kagara had achieved a significant stake in the company.�

He added that had Kagara approached the takeover with a less �hostile� attitude, Copper Strike shareholder acceptance would also have been more forthcoming.

�I think had Kagara been a bit more savvy in how they went about the bid, I think they could have been successful, at the very least they would have engendered more shareholder support from a Copper Strike perspective.�

�Given what�s happened, and their refusal to increase the offer, and it was a pretty low-ball offer, I think that most Copper Strike shareholders would have said that they really didn�t want to be part of this and would be happy to vote for the alternative proposal.�

The JV development agreements with Jintai and Taifeng were subject to the completion of a BFS, as well as government and shareholder approval.