Archive for the ‘TAKEOVERS AQUISITIONS’ Category

Chinese takeover buy of world’s largest mining project

Saturday, October 29th, 2016

Simandou iron ore mine image www.www-globalcommodities.com

World number two miner Rio Tinto is exiting the world’s largest mining project, by selling its stake in Guinea’s Simandou iron ore  to partner Chinalco, potentially opening up a new path to development for the $20 billion project.

According to a statement by Melbourne-based Rio the deal is worth between $1.1 billion and $1.3 billion payable when Simandou starts commercial production and based on output. Rio says a final agreement could be inked within six months. In February this year Rio wrote down the value of Simandou by $1.1 billion, before deciding to shelve the project.

Rio owns  46.6% of Simandou south; Chinalco’s stake is 41.3% and the Guinea government holds 7.5%. Earlier this month the World Bank’s financing arm – the International Finance Corporation – sold its its 4.6% interest.

With complete control, Beijing-based Chinalco may revive the stalled project with the backing of the Chinese governmentRio has already spent more than $3 billion on the project having first acquired the property in the late nineties. With complete control, Beijing-based Chinalco may revive the stalled project, no doubt with the backing of the central government. In September Chinalco took private its Hong Kong listed mining arm, primarily focused on copper.

China consumes more than 70% of the world’s seaborne iron ore and is on track to import one billion tonnes of the steelmaking raw material this year. Imports have gradually displaced domestic production, pushing dozens of Chinese iron ore mines into bankruptcy.

The shelving of the project has been devastating news for Guinea. Simandou by itself would’ve been the world’s fifth-largest producer at 95 million tonnes per year.

Simandou with over two billion tonnes of reserves and some of the highest grades for direct-shipping-ore in the industry (66% – 68% Fe which attracts premium pricing) has a back-of-the-envelope calculation value of more than $110 billion at today’s prices.

The initial agreement signed in May 2014 called for a new 650km railway across the West African country to Conakry, Guinea’s capital in the north, plus a new deep water port at a conservatively estimated cost of $7 billion; infrastructure investments that would double the economy of the impoverished country.

The impoverished nation, which was one of the worst affected country’s by the recent Ebolo epidemic, and is in dire need of infrastructure to develop other parts of the industry, particularly the export of bauxite, the primary ore used to manufacture aluminum. Bauxite represents some 80% of the country’s export earnings. Chinalco is primarily an aluminum manufacturer.

Simandou’s chequered history

rio-tinto-guinea-simandou-signing-may-2014 image www.www-globalcommodities.com

Rio Tinto held the licence for the entire deposit since the early 1990s, but was stripped of the northern blocks in 2008 by a former dictator of the country.

BSG Resources, a company associated with Israeli diamond billionaire Beny Steinmetz acquired the concession later that year after spending $160 million exploring the property.

In 2010 BSGR sold 51% to Vale for $2.5 billion. The Rio de Janeiro-based company stopped paying after the first $500 million after missing a number of development milestones. Then the new Guinean government under Conde launched a review of all mining contracts awarded under previous regimes and launched an investigation into the Vale-BSGR joint venture.

The Guinea government withdrew the mining permit in April last year, accusing BSGR of obtaining its rights through corruption. BSGR has denied wrongdoing and filed an arbitration request in an attempt to win compensation from the Western African nation.

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Shortly after BSGR’s rights were stripped Rio filed a lawsuit for billions of dollars against both Vale and BSGR in New York courts for what it called a “steal” of its previously-owned concession. Rio alleged BSGR paid a $200 million bribe to Guinea’s former minister using funds from Vale’s initial payment.

The US district court threw out the case in November last year saying Rio “had waited too long to file the lawsuit” under the Racketeer Influence and Corrupt Organizations Act, which calls for a four year time limit.

rio-tinto-simandou-port-visit-conde-900-506 image www.www-globalcommodities.com

 

Henry Sapiecha

Peregrine Diamonds acquires Botswana-based explorer

Thursday, April 2nd, 2015

Peregrine Diamonds acquires Botswana-based explorer

Canadian Peregrine Diamonds (TSX:PGD) said Monday it will acquire Botswana- focused junior explorer Diamexstrat, which owns eight prospecting licences in the southern African nation .

The purchase agreement transfers DES Botswana to Peregrine in consideration for a 1% gross overriding royalty to owner Diamond Exploration Strategies (DES UK) Ltd. In addition, Peregrine will assume a $450,000 loan, which it advanced to DES Botswana.

The deal allows Peregrine to buy out the royalty provisions at various milestones. Peregrine can pay $2 million if within 60 days of the discovery of a diamondiferous kimberlite, as defined by confirmation of the presence of microdiamonds or recovery of macrodiamonds in drill core/percussion chips; or $5 million if within 60 days of delivery of pre-feasibility study; or $7.5 million if within 60 days of positive construction decision. If Peregrine decides to not pursue exploration on any of the licenses, the title for those licenses revert to DES UK and Peregrine shall be granted a 1 percent gross overriding royalty with the same buy-out provisions.

As part of the transaction, DES UK will enter into a services agreement with Peregrine under which it will provide Botswana-based operational management. The transaction is expected to close on April 15.

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Henry Sapiecha

Chinese company on the verge of starting to mine uranium in Namibia

Thursday, April 2nd, 2015

Chinese firm close to start mining uranium in Namibia

China General Nuclear Power Holding Corp (CGNPC), the country’s biggest producer of nuclear energy, is getting ready to begin mining for uranium at its Husab mine, located in western-central Namibia.

According to African Review, the clean energy corporation intends to start processing the ore in February 2016, with operations slated to begin later this year.

CGNPC, which acquired the mine after taking control of Kalahari Minerals and Extract Resources, has spent over US$2bn in the project since work began in 2012, which makes it China’s largest investment in the African nation so far.

Once fully operational, Husab mine will have the potential to produce 15 million pounds of uranium oxide.

Once fully operational, Husab mine will have the potential to produce 15 million pounds of uranium oxide.

Canada’s Cameco Corp (TSX:CCO), the country’s biggest uranium producer, has been signalled in the past as potential buyer for offtake output from the project, located 8 kilometers (5 miles) south of Rio Tinto Group’s Z20 deposit in the Namib-Naukluft national park.

Uranium mineralization was first discovered in the Namibia’s Rossing Mountains, Namib Desert, in 1928 by Capt. G. Peter Louw. Uranium exploration official started in 1960s with Rio Tinto obtaining exploration rights for the Rössing deposit in 1966. It started production in 1976.

The Rössing mine is currently Namibia’s longest running and one of the world’s largest open pit uranium mines.

Image courtesy of Swakop Uranium.

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Henry Sapiecha

Allana Potash sold to Israel Chemicals for $137 million

Thursday, April 2nd, 2015

Allana Potash sold to Israel Chemicals for $137 million

Canadian junior miner Allana Potash Corp. (TSX:AAA) has agreed to be acquired by fertilizer giant Israel Chemicals Ltd. (ICL) after it failed to raise the capital it needed to remain as a standalone company.

The market reacted positively to the news as the stock was trading almost 44% higher at 47.5 Canadian cents in Toronto at 11:18 am

The $109.50 million takeover(or Cdn$137M), aims to speed up development of Allana’s promising Danakil project in northeast Ethiopia.

“Considering the generally challenging financial environment for junior mining companies, we would expect the short and long-term financing needs of Allana to include potentially significant dilution to Allana’s current shareholders,” Allana chief executive, Farhad Abasov, said in the statement.

ICL already owns 16.4% of Allana’s shares and the deal is expected to close by August 17

Danakil project location shows in below map

Allana Potash sold to Israel Chemicals for $137 million

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Henry Sapiecha

 

SHEAR DIAMONDS ACQUIRE JERICHO DIAMOND MINE IN CANADA IN DEAL WITH A SECURED CREDITOR FOR CASH & SHARES

Wednesday, May 2nd, 2012


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THE WALLS OF JERICHO ARE ENCRUSTED
WITH DIAMONDS SAYS SHEAR
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Edmonton-based Shear Diamonds Ltd. has signed a mutual cooperation agreement with Nunavut Resources Corp. for development of the Jericho Diamond Mine in Nunavut, northern Canada. Shear Diamonds, formerly Shear Minerals,  acquired Jericho — Nunavut’s first and  only diamond mine — in July of last year. The company paid $2 million plus an aggregate of 80 million shares and a 2% royalty to Caz Petroleum, the secured creditor of Tahera Diamond, the mine’s former operator.

Jericho is located 420 km northeast of the City of Yellowknife and is accessible by air all year and by winter road from Yellowknife. The project was mined from 2006 to 2008, and produced 780,000 carats of diamonds from 1.2 million tonnes of kimberlite mined from the open pit operation, before going bankrupt in 2008.
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Over $200 million was invested in the development of the Jericho operations including the construction of a 2,000 tonne per day diamond recovery plant, maintenance facility, fuel farm, and offices and accommodation for 225 personnel.

The agreement signed on Monday by Shear president Pamela Strand and NRC chairman Charlie Evalik sets out provisions for mutual cooperation in the examination of infrastructure and other development opportunities associated with the potential re-development of the Jericho Diamond Mine, according to a news release. It is the first agreement of its kind to be signed by the NRC, an Inuit-owned corporation dedicated to maximize mutual benefits at the Jericho Mine.
Surat Diamond Jewellery

Sourced & published by Henry Sapiecha

COMMODITIES GIANT GLENCORE TO PLACE TAKEOVER BID FOR GRAINCORP AT AROUND $5.2BILLION

Tuesday, May 1st, 2012

IS GLENCORE GOING TO SWALLOW UP GRAINCORP AT AROUND $5 B?

GRAINCORP shares jumped on speculation it may become the next takeover target after weekend reports that commodities giant Glencore is bidding about $5.2 billion for Canadian rival Viterra.

Shares of Graincorp rose as much as 70 cents, or 8.6 per cent, to $8.80 before easing back to $8.49 in recent trading.

RBS Morgans agribusiness analyst Belinda Moore said continuing consolidation in the global grains sector “should focus investor’s minds around what Graincorp is worth under a takeover scenario.

“Given the scale and strategic nature of GNC’s assets and the fact that it is the last remaining significant grain company capable of being taken over in Australia, we expect a number of parties could also be interested in Graincorp at some point in the future.”

London’s Sunday Telegraph reported that Glencore, currently pursuing a $US90 billion merger with diversified miner Xstrata plc, was bidding for Viterra, which on Friday (Canadian time) confirmed it had received an expression of interest from a third party.

Viterra bought Australia’s ABB Grain in 2009 for about $1.6 billion.

Viterra’s Australian-listed shares shot up $2.67, or 26 per cent today, to $13.02. Viterra’s Canadian-listed shares rose 24 per cent on Friday to close at $C13.58, giving the company a market cap of $C5.05 billion.

The Wall Street Journal is reporting that Cargill may also make a tilt at Viterra, according to Bloomberg.

RBS’s Ms Moore said past North American agribusiness takeover deals were priced on average at a 1o times earnings multiple – the enterprise value over the earnings before interest tax depreciation and amortisation – while previous takeover multiples for Australian agribusinesses were about nine times earnings.

On those multiples, Ms Moore estimated Graincorp could be worth between $14.75 – $16.56 a share, using forecast earnings for 2011-12.

The move on Viterra comes as Canada prepares to deregulate grain marketing in August, with the Canadian Wheat Board set to lose its monopoly.

Sourced & published by Henry Sapiecha

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