PERTH (miningweekly.com) – Metals miner Perilya has ceded to a takeover offer from Chinese shareholder Zhongjin Lingnan Mining, which was offering 35c for each share not already held.

Zhongjin Lingnan already owns a 53.37% stake in Perilya.

The metals miner on Wednesday pointed out that the offer price represented a 59% premium to the closing price of Perilya shares on August 30, and an 85% premium to the one-month volume-weighted average price.

“Zhongjin’s proposal is priced at a level that represents an opportunity for Perilya shareholders to realise an attractive premium for their investment in a challenging global economic environment, epitomised by weak base and precious metals prices and a high Australian dollar against the US dollar,” said Perilya MD Paul Arndt.

He noted that the cash offer provided certainty of timing and value for shareholders.

“Perilya shareholders, in considering the proposal, should be aware that in the short to mid-term, Perilya will likely have capital requirements to, among other things, ramp up the development at Potosi and introduce a new zinc/cadmium removal circuit at Cerro de Maimon,” Arndt warned.

He said that, in the current environment, where both debt and equity markets were depressed, and in the absence of the takeover offer proceeding, Perilya would likely look to raise the necessary funds through an equity offering.

“Given that we are seeing equity raisings in the current environment being undertaken at discount to market, any potential raising by Perilya would likely see dilution of the minority shareholders at a discount to market,” he added.

With this in mind, the company’s independent directors have now thrown their support behind the proposed transaction, subject to an independent expert report.

Arndt pointed out that Zhongjin was committed to continue Perilya’s current operations in Australia and the Dominican Republic and to use its financial strength to underpin the takeover target’s investment and development plans.

The Chinese company would not only look to maintain the operations, but also to expand them where possible, while retaining all key personnel at both operating locations.

The proposed takeover offer was subject to a number of conditions, including shareholder and regulatory approval.