First Quantum grabs Adastra reins

Vancouver-based First Quantum Minerals (FM-T, FMQ-L) has withstood a last minute challenge by Mwana Africa (MWA-L) to take control of Adastra Minerals (AAA-T, AAA-L).

First Quantum said that by April 28, it had taken up some 62 million or 72% of Adastra’s fully diluted shares under its twice-sweetened bid of $2.92 per share, or one of its own share for every 14.76 Adastra common shares plus 26.5 in cash. In return it forked over $29.3 million in cash and issued around 3.5 million shares.

Just one day before that offer’s deadline, Adastra advised shareholders to stick with the First Quantum bid in the face of a higher but conditional bid from Mwana. Mwana planned to back its informal offer of at least $3.85 per share with 42.1 million (US$76.1 million) raised via a recent private placement of 66.9 million shares. The war chest was to be bolstered by a “convertible loan stock structure”, which would be fully underwritten by JPMorgan Cazenove.

Adastra warned its shareholders that while Mwana’s bid trumps the current value of First Quantum’s offer, it is conditional on Mwana shareholder approval, due diligence, and the confirmation that Adastra’s project financing package for the Kolwezi project in the Democratic Republic of the Congo (DRC) is executable.

Adastra also pointed out that there could be no assurance of a formal offer from Mwana, and that even if such an offer were received, it would not be completed until at least June, whereas First Quantum’s was too soon expire.

First Quantum’s bid required the tendering of just 50.1% of Adastra’s shares. Adastra shareholders who chose the share-exchange route will receive 0.0599 of a First Quantum share plus 35.8 for each Adastra share; those taking cash will get $2.92 per share.

First Quantum plans to take up the rest of Adastra’s shares during a second-phase offer scheduled to close by early July.

Mwana was formed in late 2005 via privately held Mwana Africa Holdings’ reverse takeover of African Gold. The company has operating assets in Zimbabwe and development prospects and exploration licenses in Ghana, Zimbabwe and the DRC.

Shares in First Quantum were $1.26, or 2.3%, better at $55.30 in afternoon trading in Toronto following the news on May 1; Adastra was a nickel higher at $3.60.