Takeover target Bauxite Resources offers to return capital to shareholders

15th December 2017 By: Mariaan Webb - Creamer Media Senior Deputy Editor Online

JOHANNESBURG (miningweekly.com) – Explorer Bauxite Resources has set aside $10.7-million of its cash to reward shareholders with a capital return of 5c a share in a move to thwart a bid from Mercantile Investment Company.

Mercantile has announced an offmarket takeover bid for Bauxite Resource of 9c a share for every two shares it did not already control. Should it gain sufficient acceptances, the suitor has promised a 6c-a-share repayment to shareholders and has announced plans to terminate a joint venture between Bauxite Resources and HD Mining & Investment in Western Australia.

Bauxite Resources reported on Friday that it had A$16.2-million in cash and cash equivalent, in addition to its real estate and mining project assets. After the proposed capital return, it would have about A$5.5-million, which the board had determined should be sufficient to cover the requirements of its silica sand and hard rock quartz projects.

“The board considers the proposed capital return offers shareholders both a short-term substantial return of capital and also offers an ongoing investment in the company’s various resource projects, with the potential for real value generation over the medium to long term.”

Shareholders will vote on the proposed capital return in the first quarter of next year.