risk that dea may fail on gecamines objections, page-8

I have posted my comments after this article.

Anvil downgraded on deal concerns
Peter Koven
Source: Financial Post
2 November 2011

When copper miner Anvil Mining Ltd. agreed to a Chinese takeover a month ago, shareholders thought they had their exit strategy. But in the Democratic Republic of Congo (DRC), things are rarely that easy.

The Anvil takeover is now in serious question after the Congo's state-owned miner Gécamines said that the proposed transaction would trigger reviews of agreements covering Anvil's Kinsevere and Mutoshi projects.

That increased the risk profile for shareholders. Anvil shares are now trading more than 10% below the all-cash offer price of $8 a share, as investors fear that Minmetals Resources Ltd. will not reach an agreement with Gécamines and will drop its bid for Anvil. Analysts share those concerns as well.

"We see significant downside risk in Anvil shares if the Minmetals transaction does not proceed," RBC Capital Markets analyst Fraser Phillips wrote in a note.

He downgraded the stock to underperform (from sector perform) given the uncertainty around the deal, and lowered his price target 13% to $6.50 a share.



So let me get this straight. Those analysts said on 1 October that the C$8 price offered by MMR was a 'bargain'.

Paraphrasing this same article on the Dow Jones Newswires, because of the objectives raised Gecamines, RBC advises against buying AVM. RBC believes, in the absence of a bid, Anvil should trade at 23%-45% discount to the RBC estimated NAV for Anvil of C$7.60. Now lets just stop here.

RBC says that the Net Asset Value of Anvil Mining is C$7.60. So the bid from MMR is C$8. ONLY a 40 cent premium to their NVA!!

Seriously, how the Board considers this takeover as fair is beyond me. They are trying to give the company away for only 40c above the Net Asset Value of the company. I ask you, what sort of premium is that!

KKR