Photo by: Reuters
PERTH (miningweekly.com) – New Zealand-based Todd Corporation has made a play for ASX-listed Rutila Resources, offering shareholders 30c in cash for each share held.
Rutila told shareholders on Tuesday that the offer represented a 100% premium to Rutila’s last trading share price, and an 80.7% premium to the 30-day volume weighted average price of the company’s shares.
Todd, which already owns a 46.1% shareholding in Rutila, earlier this week signed a A$65-million transaction to gain ownership of the Pilbara Iron Ore project, from miner Flinders Mines.
The Western Australian government in December of last year invited Rutila to negotiate a state agreement for the construction of a railway in the Pilbara, linking the Balla Balla port with the proposed 25-million-tonne-a-year Pilbara Iron Ore project, being developed by Flinders.
The proposed Balla Balla port would also be serviced by Rutila’s Balla Balla magnetite/vanadium/titanium project, which has a Joint Ore Reserves Committee-compliant resource of 456-million tonnes, at 45% iron, 0.64% vanadium and 13.7% titanium.
The Balla Balla port is being developed in joint venture with Todd subsidiary Todd Minerals.
Rutila independent director Emmanuel Correia said on Tuesday that while the company had made great steps in progressing its project, the directors had to weigh the future funding requirements, existing debt profile and repayment schedule, and the current inability of junior miners in the resource sector to secure capital through the debt and equity markets, the inevitable future dilution and the broader market conditions against Todd’s all-cash bid.
“On this basis, I have welcomed the approach by Todd and recommend shareholders accept the offer in the absence of a superior proposal, and subject to the opinion reached by an independent expert,” Correia said.
“The Balla Balla project will require around A$2-billion of capital to reach production and it will be very difficult for Rutila to refinance our existing debt and obtain that capital in the current environment,” he added.
As of the end of December, the company had some A$32.5-million in debt, plus accrued interest of around A$15.6-million owing to Todd, which would be repayable at the end of December.
Meanwhile, Todd has entered into a cooperation agreement with Rutila’s other major shareholder, Nyco, which holds a 23.3% stake in the company. As part of this agreement, Nyco would remain an investor in Rutila and would not commit its shares into the offer.