Tethyan tussle heats up (March 09, 2006)

The board of Aussie takeover target Tethyan Copper (TYCFF-O, TYC-A) is stepping back from earlier advice and urging shareholders to take no action in the face of competing takeover offers.

The change of heart follows an increased bid from Hong Kong merchant bank Crosby Capital (CSB-L), which boosted its bid to A$1.35 per share from A77.5 on March 6. Crosby’s revised offer expires on March 20.

The new bid trumps an A$1.20-per-share bid from Chilean copper producer Antofagasta (ANFGY-O, ANTO-L). That bid is supported by Barrick Gold (ABX-T, ABX-N), which agreed to chip in US$100 million for a half-interest in Tethyan’s Reko Diq porphyry-copper deposit in western Pakistan.

Tethyan’s former parent company, Western Australian nickel producer Mincor Resources (MCRZF-O, MCR-A), has also agreed to tender some 12.5 million Tethyan options to Antofagasta’s bid. The options represent a 7.7% stake in the fully diluted issued share capital of Tethyan.

Tethyan had earlier advised its shareholders to accept the Antofagasta deal; it also agreed to give the Chilean at least 3 business days to decide whether to match or beat a higher offer, should one emerge.

“Your board expects to have further discussions with Antofagasta in the coming days and we hope to be in a position to provide you with further advice in relation to these takeover offers as soon as possible after March 10,” Tehyan said in a prepared statement.

Tethyan would be on the hook for a A$1.9-million break-up fee should it recommend Crosby’s new bid to its shareholders.

Antofagasta says it is currently mulling over its options. The company also recently agreed to subscribe to nearly 4.2 million shares of Tethyan at A$1.20 apiece to boost its stake to 14.85%. Tethyan says the placement would not constitute a breach of the conditions of either offer.

Both offers are conditional on 90% of Tethyan’s shares being tendered.

Tethyan holds a 75% interest in Reko Diq, which hosts total resources of 2.4 billion tonnes running 0.51% copper and 0.27g/t gold, based on a cutoff grade of 0.3% copper. The government in the province of Balochistan holds the remaining 25%.

Under the Antofagasta offer, the Chilean company would buy out BHP Billiton‘ (BHP-N, BLT-L) back-in right at Reko Diq for US$60 million.