Can there be life after Myanmar for Myanmar Metals when it gets rid of its mine in the benighted country, changes its name and departs?
Management certainly is hoping for a rebirth (and to join the hunt for renewable metals such as copper and nickel), even though the market seems to be sceptical.
The shares have been suspended since February 1 when the military staged a coup and took control of Myanmar.
On August 17 it revealed the proposed sale of its 51% stake in the Bawdwin silver lead prospect in Myanmar.
The company said in its August 17 announcement that it will get $US30 million (or around $A40 million) from the sale, if its shareholders approve the sale at a meeting on September 24.
That’s the lower of two offers – the other is a conditional, non-binding $A55 million offer from Chinese mining giant Yintai Gold
The board though is urging shareholders to accept a lower, but less risky take-over offer.
Executive chairman and chief executive John Lamb said in Wednesday’s statement the company was disappointed what has happened since a military coup earlier this year, saying he believed the company could have used Australian know-how on “a great mineral deposit” to the benefit of everyone.
Instead, the company will now look for another project with base, battery, and precious metals. He has put forward a name change to Mallee Metals.
The company has decided to sell the Bawdwin mine because “the board sees no prospect of there being an operating environment in Myanmar conducive to an ASX-listed company seeking to procure project finance in the short to medium term”, Mr Lamb wrote in a letter to shareholders lodged with the ASX on Wednesday.
The company also would not simply hold on to the mine and hope for a return of stable government because the holding costs could diminish its cash reserves and expose it to adverse moves in markets.
“Myanmar Metals has run a structured and expedited sales process to seek offers from potential acquirers with business in or close to Myanmar,” Mr Lamb wrote.
In Wednesday’s letter Mr Lamb cast doubt on whether Yintai Gold was serious.
Mr Lamb said to the best of the company’s knowledge, Yintai has not completed its due diligence, visited the site, or contacted other mine owners.
Myanmar Metals has also received a $40.8 million offer from its joint venture partner WMM, which requires less regulatory approval, but is only 2.1¢ per share.
The board is urging shareholders to accept the lower offer from its joint venture partner, WMM because it is less risky.
“WMM’s offer provides shareholders with certainty and a timely exit from Myanmar and, perhaps to labour a point already made, taking the shortest path to the completion of a transaction reduces exposure to further adverse events,” Mr Lamb wrote.
Myanmar is also looking at a share consolidation would likely see a 10-for-1 consolidation to boost the trading price (its last sale was 7 cents back in February) and reduce the number of shares on issue to a more manageable (and less costly) 200 million.
Myanmar Metals largest shareholders are Perilya Ltd with 16.8% which in turn is owned by China’s third largest zinc producer, Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd.
Noted WA explorer Mark Creasy’s Yandal Investments is the second-largest shareholder with 10.7%. Mr Creasy may play a key role in finding some prospects for the company – he has a long history of doing just that.
