More action among the tiddlers of the iron ore industry yesterday.
Shares in iron ore group Midwest Corp were placed in a trading halt, pending an announcement about a proposed takeover of the WA-based company by China’s Sinosteel Corp.
That announcement came last night and the bidding is over. A higher price, board greenlight and Midwest has accepted Sinosteels’ offer, giving China its first big win in Australian takeovers, providing all things happen to the script.
Midwest shares were on $6.10 when trading was halted. The rejected offer was $5.60 cash, now its $6.38 a share cash. Brawl over.
The deal ends months of hostilities between the pair, which had a long-running joint venture over Midwest’s projects in WA’s burgeoning mid-west iron ore province.They had been ‘friends’ when rival Murchison Metals launched a paper offer last year that was spurned
Sinosteel’s offer was approved by the Foreign Investment Review Board in January – before the surprise $15 billion raid on the London listed shares of Rio Tinto by Chinalco, which raised fears of an onslaught of Chinese raids.
Midwest and Sinosteel spent most of yesterday in negotiations before they announced the agreed $6.38-a-share deal. Sinosteel’s previous offer of $5.60 had been rejected by the Midwest board.
It had said it thought the company was worth about $7 a share due to the strength of its flagship Weld Range hematite project – which could produce at least 15 million tonnes of iron ore a year – and other projects in the region.
Sinosteel’s bid is conditional on achieving acceptances from 50.1 per cent of Midwest shareholders, meaning investors with strong beliefs in the company’s growth prospects could choose to remain as minority holders. There are a group of Malaysian investors thought to control around 40%
Midwest may not be the first target for Sinosteel in the mid-west region. Murchison Metals, which was last year’s unsuccessful suitor, yesterday revealed that Sinosteel held 2.4% of its shares.
Apollo Minerals shares have closed up 24.5% after an unknown Chinese group advised it would increase its stake in the iron ore explorer.
Apollo said in a statement to the ASX before trading opened that Hugo Natural Enterprises, a company domiciled in the tax haven of the British Virgin Islands, had advised the explorer it would increase its stake to 19.9% from the current 12%.
The statement said "Apollo is currently exploring two iron ore projects; one in Western Australian and one in South Australia (see attached maps). Apollo continues to review other opportunities in the iron ore sector in Australia and overseas in a time of rising iron ore prices.
"This written confirmation of Hugo’s intention to increase its stake in Apollo confirms the strong Chinese interest in Apollo’s Mt Oscar iron ore project and it’s SA Iron Ore Project.
"Once this transaction is completed Apollo currently expects its cash position to be in excess of $10m which will assist the Company’s aim of becoming a significant Australian iron ore company."
Shares in Apollo surged 3.5c or 13.21% to 30c in early afternoon trading and then finished up 6.5c at 33c. It has been as high as 50c in the recent past.
The mystery Chinese group acquired an initial stake in Apollo in December and flagged increasing that interest to 19.9%, subject to shareholder and regulatory approval.
Apollo has signed a non-binding memorandum of understanding giving the Chinese group the right to market iron ore produced from the explorers Mount Oscar project in the Pilbara, subject to successful development.
Cape Lambert Iron Ore said yesterday that the sale of its iron ore project is on track despite China Metallurgical Group Corp having to resubmit its application to the Foreign Investment Review Board.
The company said MCC had been asked to resubmit the application at the request of FIRB, who indicated they were unable to reach a determination prior to the statutory deadline.
Cape Lambert said in a statement to the ASX that it is now expected that a decision will be made by FIRB prior to May 28.
Cape Lambert Chairman, Ian Burston, said in the statement that "Due diligence has been completed and the outcome of the resubmitted FIRB application will be known within a month, all well within the original time frame for key milestones for the sale to be achieved.
"MCC has advised that they now wish to finalise the Sale Agreement related to the acquisition of the Cape Lambert Iron Ore Project, which gives us great confidence that this company defining transaction will soon be completed.
"The Board of Cape Lambert remains committed to working with MCC towards the successful sale of the Project, to the benefit of all shareholders and stakeholders in the Company."
Shares in the company fell 1.5c in early trading but rose in the afternoon to end up half a cent at 64.5c.
And Iron Road Ltd, another hopeful, opened a public offering of shares to raise $5 million to fund the development of its assets and ride the boom.
Iron Ore is acquiring the Warramboo iron project in the Eyre Peninsular in South Australia from Adelaide Resources Ltd.
That’s a long way from the Pilbara. There are iron ore resources being used by OneSteel near Whyalla in South Australia.
The site contains extensive magnetite anomalies with a cumulative strike length in excess of 50 kilometres.
Iron Road’s cornerstone investor, The Sentient Group, has a 19.9 %. A total of 25 million shares at 20c each are being offered.
The offer close
