Photo by: Bloomberg
PERTH (miningweekly.com) – ASX-listed Mercantile Investment Company has announced its intention to make a proportional off-market takeover bid for half of fellow-listed Bauxite Resources as part of a plan to put cash back in shareholders’ pockets after a decade of “failed” exploration efforts.
In a letter to Bauxite Resources shareholders, Mercantile detailed its planned offer of 9c a share for one of every two shares it did not already control, saying the price represented a 14% increase on the last sale price of Bauxite Resources shares.
Mercantile explained on Wednesday that should it gain sufficient acceptances of the offer, the company would immediately make a 6c a share repayment to shareholders, and would terminate a joint venture 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.
After settling all liabilities, the company would pay the remaining funds to shareholders.
“After ten years of unsuccessfully searching for bauxite, lithium and silica sands, it is time to call a halt,” Mercantile chairperson Ron Brierley said on Wednesday.
He noted that since listing on the ASX in 2007, Bauxite Resources had failed to find any viable resources, and had chalked up losses of A$48-million in the process.
Furthermore, the company’s intention to seek other business opportunities to better use cash resources, as stated in its latest annual report, was “ominous”, Brierly stated.
“The best use of remaining surplus cash is back in shareholders’ hands,” he added.