With an independent board committee of ASX-listed Canyon Resources having recommended that shareholders take no action and reject an off-market takeover bid made by its largest shareholder, A2MP Investments, the prospective acquirer has put out a new supplementary bidders statement that addresses concerns raised by the committee.

A2MP, a 55.56% shareholder of Canyon, announced a conditional cash takeover to acquire all the remaining Canyon shares it does not own for A$0.05 apiece, valuing the company at A$103-million, in July.

Canyon, which is developing the Minim Martap bauxite project in Cameroon, said the offer materially undervalues the company and is not fair nor reasonable to shareholders, particularly minority shareholders.

Nonexecutive chairperson Mark Hohnen said that the offer value was less than the capital spent to deliver first shipments from the projects and that the offer price represented discounts of between 42% and 62% to Canyon’s closing share prices of July 28 before the offer was made, for the last 30 days and for the last six months.

While A2MP believed changes in market conditions had materially lowered and adversely impacted the economics and viability of Minim Martap, Canyon said these assertions needed to be supported by sufficient independent analysis.

In its latest statement A2MP said the independent expert valuation of Canyon placed significant weight on an indicative, non-binding and uncertain funding proposal and contingent ‘residual resources’ that may never be extracted, and contained other deficiencies that risked misleading Canyon shareholders.

A2MP said Canyon’s independent board committee rejection of the offer relied on an updated model that adopted different valuation methodology to the independent expert, which was BDO Corporate Finance Australia, and used a production profile that the independent expert did not consider it had reasonable grounds to include.

A2MP said it remained prepared to accept the significant risk, time and effort of bringing a project such as Minim Martap to fruition but understandably required appropriate reward. It further claimed that Canyon failed to answer specific questions raised in the original bidder’s statement and the first supplementary bidder’s statement.

For example, the project pricing assumptions remain uncontracted while the valuation of the project continues to rely on forecast bauxite prices and quality premia that are not supported by any disclosed binding offtake agreement or committed pricing arrangement. Another issue is that of ramp-up economics and funding requirements that remain uncertain.

A2MP explained that first production of 400 000 t was now assumed for 2027 while the independent expert identified cashflow shortfalls in 2028 and subsequent periods even under Canyon’s funded case. The independent expert assumed additional funding would be available when required but did not specify committed funding sources to address shortfalls.

“Canyon shareholders should consider the extent to which the project may require additional funding during ramp-up and potential consequences if production, funding or infrastructure milestones are delayed,” A2MP said.

A2MP maintained that the offer was not unfair to minority shareholders who do not have to accept the offer. Rather, it provided shareholders with a full liquidity opportunity.

A2MP said its aimed to fund and deliver the project under stable and long-term ownership to create lasting benefits for Cameroon – including through its broader strategy in advancing an integrated bauxite-to-aluminium value chain in Cameroon, with downstream alumina refining.

The company urged shareholders to consider all available information in its bidder’s statement and to accept the takeover offer, which was open until September 21 unless extended or withdrawn.