PERTH (miningweekly.com) – Base metals miner Albidon was considering a takeover offer from shareholder Jinchuan Group Resources Holdings, to acquire all the outstanding shares in the company for $0.0025 a share.
The company said on Thursday that it had signed a conditional merger implementation agreement with Jinchuan subsidiary Jin Tuo Investment for the acquisition of all the outstanding, fully paid ordinary shares in the company.
Jinchuan currently holds a 49.93% interest in Albidon.
Albidon said its board considered that the terms of the offer provided adequate value to current shareholders in view of the company’s current circumstances, and had unanimously recommended that shareholders vote in favour of the merger.
Albidon has found itself in an uncertain financial situation since share trading was first suspended in 2011, following the identification of certain operational issues at its Munali nickel mine, in Zambia.
The Munali mine was placed on care and maintenance in December last year, with Albidon engaging in a number of discussions with parties to locate a cornerstone investor willing to make a significant capital investment, and assume a hands-on management role.
To top it off, an independent review of the Munali mineral resource decreased the indicated resource by some 25%, and the estimated nickel-containing resource by some 42%. The report also found that no measured resource had ever been reported for Munali, and that there was currently an insufficient basis to conclude that the reclassified resource could be mined economically at current metal prices.
Albidon said on Thursday that considering the amount of funding that Jinchuan had already injected into the company, and the continued funding needed for the Munali mine, Jinchuan was of the belief that the company would be better served by taking full ownership of Albidon and its assets.
“I believe the merger is in the best interest of shareholders when considering all efforts to find a third-party investor, who could breathe new life into the company, have been exhausted,” said Albidon chairperson Shang Sanlin.
“By making a cash offer for the shares that Jinchuan does not already own, shareholders will at least be able to recoup a portion of their investment. The only other alternative is liquidation of the company, which would provide no return to shareholders,” Sanlin said.
A shareholder meeting was expected in May this year, and shareholders have been advised to vote in favour of the proposed merger.