In a more cordial Australian takeover story, LionOre Australia (Nickel) independent director, Chris Baker, is advising minority shareholders to accept LionOre Mining International‘s (LIM-T) A85-per-share cash offer for the 20% stake it doesn’t already own in the Aussie nickel miner.
The bid is aimed at about 27 million shares, and is valued at around A$23 million.
Baker says that KPMG Corporate Finance’s independent assessment of the offer concludes that the offer is, “fair and reasonable,” and the he would exercise his own options on LionOre Nickel shares and then tender them to the offer.
“Based upon the finding by the independent expert and in the absence of a higher offer, I recommend that all shareholders accept the offer,” he added.
KPMG’s study placed the preferred value of LionOre Nickel shares at A77.3 (fully diluted), and indicated that the A85-per-share offer represented a premium over both the preferred value and the highest price attained by LionOre Nickel’s shares prior to the offer.
Since launching the bid in early September, LionOre Mining International has boosted it stake in its Australian nickel subsidiary to 82.3% by securing an option on up to 3 million shares from the Golden Arrow Fund, LionOre Nickel’s second largest shareholder.
LionOre Nickel’s key asset is the Emily Ann underground nickel mine in the Lake Johnston greenstone belt of Western Australia. Production began last November and by June the mine wrapped up commissioning and achieved its targeted processing rate of 250,000 tonnes of ore per year.
The mine is expected to churn out around 5,700 tonnes of payable nickel during 2002, increasing to around 6,700 tonnes at a projected life-of-mine cash cost averaging US$1.60 per lb. nickel (US$3,520 per tonne) thereafter. Probable mineral reserves stand at 1.2 million tonnes grading 3.36% nickel, or 39,500 tonnes of contained nickel, for a mine life of five years.
The company is also looking at the feasibility of developing the 31%-owned Maggie Hays deposit in conjunction with Emily Ann. Maggie Hays is situated about 3 km to the south.
In late-afternoon trade in Toronto on Oct.15, the parent company’s shares were 20 or 5.8% higher at $3.65.
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