re: takeover - nmc advise to reject offer Hi all who are...

re: takeover - nmc advise to reject offer Hi all who are following NMC, this script is out of this morrning west australia
NuStar bid throws a spanner in split move

JOHN PHACEAS







East coast miner Sedimentary Holdings has cast doubts over St Barbara Mines' plans to split from its listed offshoot NuStar Mining, lodging a $69 million scrip offer for the junior company and its Paulsen's gold mine near Paraburdoo.

Sedimentary, which owns 30 per cent of the rich Cracow gold mine being developed by Newcrest Mining in Queensland, yesterday offered two of its shares for every nine in NuStar, notionally valuing the target at 7¢ a share. NuStar shares subsequently jumped 0.5¢ to close at 6.6¢.

The offer comes 10 days before St Barbara shareholders vote on a plan to slash the company's 44 per cent cross-shareholding in NuStar. Under the plan, St Barbara will swap 240 million shares it holds in NuStar for 192 million of its own that will subsequently be cancelled.

Investors will also be asked to approve an option allowing Claymore Capital to buy another 100 million NuStar shares at 5¢ from St Barbara, leaving it with 10 per cent.

At St Barbara's 7.1¢ close yesterday, the share swap valued NuStar at 5.7¢ a share, while Sedimentary's offer valued the stock at 6.8¢ based on its 31¢ close.

Sedimentary managing director Rob Devereux said the offer represented a healthy 29 per cent premium to NuStar's pre-bid average.

It would also enable shareholders of both groups "to participate on attractive terms in a larger and more diversified gold company with good exploration potential."

With Paulsen's due to produce 80,000 ounces a year from next May, and Cracow poised to pour first gold in days, Sedimentary would emerge with total annual production of more than 110,000oz.

But NuStar chief executive Brett Lambert dismissed the bid as "opportunistic", saying NuStar would soon be a bigger producer than Sedimentary in its own right, and that he expected a substantial re-rating of the stock as it neared production.

"I suspect as we progress toward a gold pour at Paulsen's, our price will naturally appreciate . . . so timing is critical for them, and I can see why they've done it," he said.

"I don't really think it is in our shareholders best interests on an ounce-for-ounce basis. For us, there's really not much of an upgrade in total production or size."

But Mr Devereux said NuStar was ignoring the true potential of Cracow.

"It's a potential world-class deposit . . . building up to three million ounces," he said."We've got eight high-grade mineralised structures there so far and the majority of production is coming from only two of them."

St Barbara's independent expert has valued NuStar shares at just 3.1¢, Mr Lambert was confident the St Barbara split would succeed.

Notably, shareholders aligned with ousted former St Barbara chief Stephen Miller, who together hold over 21 per cent of the stock, are backing the split. The deal will see the group quit St Barbara but hold almost 20 per cent of NuStar.

Mr Miller yesterday attacked Sedimentary's offer as "audacious and deficient".

New St Barbara chief Ed Eshuys was confident the share swap and consolidation would proceed. St Barbara did not intend to accept Sedimentary's offer for its residual stake in NuStar after the transaction, he said.

US group RCF, which used its 21.9 per cent stake in St Barbara to overthrow Mr Miller in July, is also understood to back the split with NuStar .