could be right there bingyBillionaire proposes Australasian...

could be right there bingy

Billionaire proposes Australasian merger
Email Print Normal font Large font July 24, 2008 - 1:24PM

Advertisement
Billionaire philanthropist Clive Palmer has proposed a $327 million merger between his investment vehicle Resource Development International Ltd (RDI) and junior iron ore explorer Australasian Resources Ltd.

Mr Palmer already holds 66.37 per cent of Australasian, which is at the financing stage of its $2.7 billion Balmoral South project in Western Australia's Pilbara region.

The project is an alliance between Australasian and its 6.3 per cent shareholder and China's fourth largest steel maker Shougang Corporation.

RDI's proposal to acquire Australasian by a scheme of arrangement places a notional price of $2.20 on each Australasian share.

At 1306 AEST, its shares had surged 36.5 cents, or 30.54 per cent, to $1.56.

RDI, which is finalising a proposed $5 billion initial public offer late this year ahead of listing on the Hong Kong Stock Exchange, plans to offer its own shares to Australasian as consideration for the merger.

RDI may also consider an Australian stock exchange listing.

Mr Palmer plans to expand RDI into a diversified resources giant, which could be worth as much as $18 billion, by providing iron ore, nickel and energy to the Chinese market.

The company's interests include rights to 20 billion tonnes of iron ore on the Balmoral tenements held by Mr Palmer.

Australasian has negotiated with Mr Palmer for the right to mine one billion tonnes of iron ore at the project, which is slated to commence production in 2010-2011 at a rate of 12 million tonnes per annum (Mtpa).

Australasian says the proposed merger and RDI's Hong Kong listing will be completed late this year.

"The proposal currently does not constitute a formal offer by RDI for ARH (Australasian) shares," Australasian said.

"If the proposal is accepted by the board of ARH, a scheme implementation agreement will be executed between RDI and ARH to progress the opportunity.

"Under the terms of the proposal, existing ARH staff would be engaged to manage RDI's iron ore division."

Australasian said Shougang was "open and receptive to the opportunity outlined by ARH".

Shougang can earn a 50 per cent interest in the Balmoral South project by financing it through an interest-free loan and agreeing to buy all iron ore from the project for 25 years.

"The two parties will continue to advance current plans and efforts to obtain a finance offer from Shougang and develop the Balmoral South iron ore project," Australasian said.

Australasian said in March that it expected to secure environmental approval by October for an operation of up to 24 Mtpa.