PERTH (miningweekly.com) – ASX-listed Gindalbie Minerals on Monday announced the demerger of its subsidiary Coda Minerals, and its simultaneous takeover by Chinese shareholder Ansteel.
The demerger of Coda, which holds the rights to a significant and strategic portfolio of tenements in South Australia, would be done through a capital reduction, with Gindalbie shareholders to receive a pro-rata distribution of Coda shares for every Gindalbie share held.
Coda will hold the Mt Gunson assets and A$10.64-million in cash.
Gindalbie said on Monday that the demerger would allow Coda to further exploit exploration opportunities while removing the subsidiary from significant contingent liabilities remaining with Ginalbie, arising from Gindalbie’s stake in the Karara iron-ore project.
At the end of December last year, Gindalbie had contingent liabilities worth A$231-million in relation to bank guarantees to suppliers of Karara, with the project currently having a carrying value of nil.
Meanwhile, Ansteel has made a 2.6c a share offer for Gindalbie, offering a 90% premium to Gindalbie’s 30-day volume weighted average share price.
Ansteel currently holds a 35.71% interest in Gindalbie and is a 52.16% shareholder in the Karara project.
Gindalbie told shareholders that having regard to the operating performance of the Karara project, the level of debt within the Karara holding company, and the potential for future dilution due to cash calls and the ongoing requirement for financial support from Ansteel, the independent directors of Gindalbie have considered the two inter-conditional transaction to be in the best interest of shareholders.
“The acquisition and demerger allow Gindalbie shareholders to receive a cash price significantly higher than the current market price for their Gindalbie shares as well as to emerge with an ownership stake in an exciting new company that is focused on the Mt Gunson copper/cobalt project,” said Gindalbie non-executive chairperson Keith Jones.
“Coda intends to apply for a listing on the ASX, with listing subject to all necessary approvals, and carry out fundraising in the short- to medium-term to strengthen its balance sheet.”
Jones said that the company was proud of the role it had played in developing the Karara project, as well as the long-term jobs and benefits it had created for Western Australia.
“Karara was conceptualized during a different and unprecedented time in the global iron-ore cycle. In today’s more subdued iron-ore price environment, a small company like Gindalbie is ill-suited to retain a significant minority investment in a capital-intensive project like Karara.
“The broader investment community has made that abundantly clear to Gindalbie’s board and management, and I consider this reflected in Gindalbie’s share price.
“With the strong support of our Karara joint venture partner Ansteel, we have been able to structure a deal that delivers significantly more value for all Gindalbie shareholders than the market currently ascribes to your shares.”
Gindalbie shareholders will be given the opportunity to vote on both the demerger and the takeover offer.