MonterricoÆs main asset is development rights for the Rio Blanco copper-molybdenum project in northern Peru, a significant-scale copper development. It is forecast that by 2010 a planned greenfield facility will be producing 220,000 tonnes of copper concentrate and 2,500 tonnes of a separate molybdenum concentrate. Under consideration is a subsequent expansion of 50 million tonnes of ore per annum from year four. Monterrico also has other base and precious metals projects in Peru, and has an interest in the Monarc gold project in northern Peru.
Richard Ralph, executive chairman of Monterrico, says: ôThe offer from the Zijin consortium allows Monterrico shareholders to crystallise immediate value.ö However, subsequent statements Ralph made in interviews suggest he could be hopeful of a competing, higher bid.
The Zijin consortium approached Montericco in October 2006. Then on December 1, Monterrico confirmed the legal title held by its 100% subsidiary, Minera Majaz SA, over the surface rights covering the Rio Blanco project.
The price of ú3.50 per share represents a premium of 79% to the closing price of Monterrico on October 13, the last business day prior to the significant increase in the share price that followed the announcement of the bid. The price represents a premium of 34% to the closing price on October 19, the last business day before the commencement of the offer period. However, the shares have consistently traded up since the takeover news reached the market and it was up to ú3.48 in early trading on Monday morning.
Monterrico directors including Richard Ralph will tender 9.9% of their shares and 54% of the existing "in the money" options. The buyers intend Montericco to remain listed with a freefloat of at least 30% and have put in place a structure to reflect this.
The Monterrico board cited both the premium being offered and the ôsignificant time, effort and resources required to secure the requisite permits and financing in order to develop the Rio Blanco deposit on a standalone basisö as compelling reasons for recommending the takeover.
The Zijin consortium was created to takeover Monterrico. Zijin holds 45%, Tongling 35% and Xiamen 20%. Zijin (Hong Kong Stock Exchange listed) operates six gold mines in China and also owns copper assets. Tongling - which includes publicly-traded subsidiary Anhui Tongdu Copper - is in copper mining, mineral processing, smelting and refining and copper products processing.
Xiamen (listed on the Shanghai Stock Exchange) is a state-owned conglomerate investment enterprise.
BNP Paribas and Ambrian Partners are advising the Zijin consortium. HSBC is advisor to Monterrico.
¬ Haymarket Media Limited. All rights reserved.
