PERTH (miningweekly.com) – ASX-listed Kagara, which is bidding for Copper Strike, on Friday questioned whether its takeover target’s board had the experience and capability to develop the Einasleigh project, in Queensland.
Kagara is bidding 11c a share in cash for Copper Strike, an offer which was rejected as “highly opportunistic”.
Copper Strike chairperson Tom Eadie stated previously that Kagara should not obtain control without “paying a price which appropriately reflects the underlying value of Copper Strike’s assets to them”.
But Kagara chairperson Kim Robinson said on Friday in a response to Copper Strike’s target statement, that the development of the Einasleigh project was “critically dependent” on assumptions regarding commodity prices, exchange rates and production levels.
“The estimated cost of Einasleigh is reported as A$13-million exclusive of any working capital requirements. This is subject to financing, regulatory approvals, and there are no current concentrate or offtake agreements in place,” Robinson said.
He added that an evaluation of the project has also found that it would not pay back the capital cost of development until the sixth year of operation.
“Kagara does not believe that the larger Einasleigh project, including the Einasleigh, Kaiser Bill, Chloe and Jackson project is bankable in its current state,” Robinson noted.
Robinson also said that the Kagara offer was the only offer on the table for Copper Strike, and without it, there was a risk that that company’s share prices could fall back to the preoffer trading range.
“Before making a decision on whether or not to accept the offer, Copper Strike shareholders need to consider if the current Copper Strike board has the experience and capability to develop the Einasleigh project.
“Consolidating the ownership of Copper Strike’s assets within Kagara provides the only logical and available development and processing option for the Einasleigh project in the region,” Robinson said.
The offer period for Copper Strike has now been extended until the end of December.
The takeover offer was subject to a 90% acceptance condition, as well as regulatory approvals.
However, Kagara has a prebid acceptance agreement in place with Copper Strike’s largest shareholder, Tech Australia, under which that company has agreed to accept the offer for its 16,7% shareholding in Strike Copper.
Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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