PERTH (miningweekly.com) – Takeover target Bauxite Resources has defended its position in the wake of a proposed takeover offer from ASX-listed Mercantile Investment Company.

Mercantile on November 8 announced its plans to make a proportional off-market takeover bid for Bauxite Resources, offering 9c a share for one of every two shares it did not already control.

Mercantile had said that should it gain sufficient acceptances of the offer, the company would make a 6c a share repayment to shareholders, and would terminate a joint venture (JV) between HD Mining & Investment and Bauxite Resources in Western Australia.

Furthermore, Mercantile planned to cease all exploration activities currently being undertaken, and to divest of Bauxite Resources’ fixed assets, including two farming properties.

Bauxite Resources on Friday took affront to statements made by Mercantile chairperson Ron Brierly, who said that it was time to halt Bauxite Resources’ operations after “ten years of unsuccessfully searching for bauxite, lithium and silica sands”.

The takeover target said that the statement from Brierly was misleading, pointing out that the company had participated in finding both the Felicitas and Fortuna bauxite resources, which was sold to JV partner Yankuang Group for A$7.5-million and a royalty right over the first 100-million tonnes of bauxite mined at a rate of 0.9% of the price paid.

The company also pointed out that the partnership with HD Mining had resulted in the establishment of an 87.6-million-tonne resource, with the costs of the JV being funded by HD Mining.

Furthermore, Bauxite Resources pointed out that the company was most recently focused on its Silica project, and was hoping to be in the position to announce a potential project in the near future.

“The company’s board is focused on continuing to generate real shareholder value in the medium to longer-term. Ongoing capital management activities are also constantly being considered by the board,” Bauxite Resources told shareholders.

The company has reiterated its advice that shareholders not take any action regarding the Mercantile bid.