Phosphate Australia board rejects offer from Mercantile
PERTH (miningweekly.com) – Junior developer Phosphate Australia has rebuffed a takeover offer by fellow-listed Mercantile Investment Company, saying the offer, which placed zero value on the company’s projects, was neither fair, nor reasonable.
At the end of March, Mercantile launched an on-market takeover offer for Phosphate Australia, offering shareholders of that company 2c a share for each share held.
Phosphate Australia on Monday told shareholders that an independent expert had valued the company’s shares at 15.6c each, meaning that the takeover offer significantly undervalued the company.
The ASX-listed junior also said that the offer price was below the cash backing per share, which was at 2.5c a share, placing zero value on the company’s projects. “The offer put forward doesn’t even account for the cash we have in the bank, let alone provide shareholders with any value for the company’s quality assets,” said Phosphate Australia executive chairperson Jim Richards.
“Mercantile has lobbed this at a time when the junior resources sector is being shunned by the market, and we are not immune from those market forces. However, the independent expert has valued our projects at A$21.5-million and concluded that Mercantile’s offer is neither fair, nor reasonable.”
Richards pointed out that Phosphate Australia’s assets included the Highlands Plains project, in the Northern Territory, which had an inferred resource of some 53-million tonnes, and was considered one of the best phosphate projects in Australia, as it had a defined resource and was close to existing infrastructure and potential transport solutions.
The directors of Phosphate Australia had urged shareholders to reject the Mercantile offer.
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