MiningNews Pilbara juniors become prey Kristie Batten Thursday, 11 November 2010
BROCKMAN Resources and FerrAus have received separate proposals for conditional off-market takeover offers from major shareholder, Hong Kong-listed Wah Nam International, which is aiming to form one of the Pilbara?s biggest iron ore players.
Drilling at Brockman's Marillana project in the Pilbara.
Wah Nam, incorporated in Bermuda, currently holds 19.9% of FerrAus and 23% of Brockman after taking an initial stake in Brockman in June 2009 followed by an investment in FerrAus in June this year.
The investment company is offering 30 Wah Nam shares for every one Brockman share held, valuing Brockman at $A6.47 per share or $923 million.
The offer represents a 42.8% premium to Brockman's closing price yesterday of $4.74 and a 61.5% premium to its 30-day volume-weighted average price.
In the four months leading up to the announcement of the offer, Wah Nam has been buying small parcels of Brockman shares, paying between $2.80 and $4 per share.
Meanwhile, Wah Nam is offering six shares for every one FerrAus share held, valuing the company at $1.29 per share.
The proposed offer price is a 52.2% premium to FerrAus' closing price of 86c yesterday and a 63.2% premium to its 30-day VWAP.
Wah Nam has been steadily building its holding in FerrAus since taking an initial 11% stake in June, paying between 74.3c and 84c per share.
Both companies have advised shareholders to take no action until formal bidder's statements are received.
Bidder's statements for both offers have been lodged with the Australian Securities and Investment Commission.
In the statements, Wah Nam says it has no intention of making any significant changes to the business operations or company structures, but is instead focused on combining management teams and skill sets to develop Brockman's Marillana project and FerrAus' Pilbara project.
Marillana is set to start production in late 2013 at a rate of 17-20 million tonnes per annum, while FerrAus is completing a prefeasibility study on a 15Mtpa mine.
Wah Nam believes its listing on the Hong Kong Stock Exchange will provide better access for project financing.
Marillana is expected to cost $1.9 billion, while a scoping study on FerrAus' Pilbara project envisaged costs of $600 million to $1 billion.
Brockman and FerrAus are members of the North West Iron Ore Alliance, which has recently started a definitive feasibility on 50Mtpa of port access at Port Hedland and received conditional approval from the Australian Competition and Consumer Commission to collectively negotiate for haulage services and rail track access in the Pilbara.
As part of its strategy to become a major Pilbara iron ore developer, Wah Nam has applied to dual-list on the Australian Securities Exchange.
In its initial public offering, Wah Nam will seek to raise up to $3 million via the issue of up to 15 million shares at 20c per share.
ASX shareholders will hold just 0.38% of the company.
The company has also launched a separate placement to raise around $100 million via the issue of 600 million shares at $HK1.30 (A20c) per share.
As well as its stakes in FerrAus and Brockman, Wah Nam owns the Damajianshan copper mine in China and a limousine and airport shuttle bus business operating in Hong Kong and China.
Shares in Brockman and FerrAus have jumped on the proposed offer, with FerrAus shares soaring 26% or A22c to $1.08, while Brockman is up 16% or 78c to $5.52.
AGO Price at posting:
$2.96 Sentiment: Buy Disclosure: Held
