PERTH (miningweekly.com) – Mineral sands miner Iluka’s £215-million acquisition of Sierra Rutile is at risk of failing, owing to geotechnical risks at two tailings dams that form part of the takeover target’s operations in Sierra Leone.
Iluka has issued Sierra Rutile a notice of nonfulfillment of the material adverse change condition precedent under the merger implementation agreement.
Iluka said on Tuesday that it would “consult” with Sierra Rutile, but warned that if the parties could not reach a consensus within five business days after Wednesday, either party could terminate the merger agreement.
Sierra Rutile responded that it did not believe that there had been any event that would result in the nonsatisfaction of the condition. "Sierra Rutile’s production remains in line with management’s and market expectations and its operations within appropriate industry standards,” the company said.
The multimillion-pound deal was approved by the German competition authority last week, and has previously gained Sierra Rutile shareholder approval.
The transaction was meant to close on Tuesday, at which stage Sierra Rutile would have had its shares suspended from trading on the Aim. The London-listed company said it would provide a further update “as soon as possible”.
Shares in Iluka fell 3.38% to A$6.28 a piece on Tuesday afternoon in Sydney. Sierra Rutile closed at 35p a share on Monday. The stock fell to 29p on Tuesday afternoon in London.
The acquisition of Sierra Rutile will enhance Iluka's rutile portfolio position and sits alongside its existing position as the largest global zircon producer.