The board of Discovery Metals, the owners of Boseto Copper Project in Botswana has advised its shareholders to reject the hostile takeover bid from Chinese consortium-Cathay Fortune Investment Limited.
In a communication to shareholders, the board of the Australian company says the Independent Expert has concluded that the offer by Cathay Fortune Investment Limited of $1.70 per DML share is ‘neither fair nor reasonable’.
The Offer Price of $1.70 per share is inadequate, says the board arguing it represents an insufficient premium of only 17% to the closing share price on 3 October 2012.
The new developments also come with the release of Target’s Statement in response to the takeover offer which the board sees as ‘opportunistically’ timed to exploit a period of temporary share price weakness.
“The Independent Expert has concluded that the current fair market value of a DML Share is in the range of $1.74 to $2.11, which is above the Bidder’s Offer Price of $1.70,” says the letter to shareholders.
Chairman Gordon Galt says the Cathay Fortune Investment offer fundamentally undervalued Discovery Metals.
“The Board and management of Discovery Metals continue to work hard to deliver further value for shareholders and will keep investors informed about progress with Boseto, its planned expansion and our exciting exploration opportunities. For the reasons set out in the Target’s Statement, we recommend that shareholders REJECT THE OFFER,” argues Galt.
“The Bidder would not be offering to buy your Shares at the Offer Price unless it expected to make a good return, and this return should be yours to collect by holding your Shares.”
DML has sent a copy of the Company’s Target’s Statement to shareholders in response to the offmarket takeover bid by Cathay Fortune Investment Limited, as set out in its Bidder’s Statement dated 8 November 2012.
A copy of the Target’s Statement has also been lodged with the Australian Securities and Investments Commission and sent to Cathay Fortune Investment Limited.
DML board argues the company is well positioned to deliver future value to shareholders through the planned, low cost expansion of Boseto production to more than 50ktpa production by 2015 and development of future growth options, including potential parallel projects.
DML’s Kalahari Copperbelt prospecting licences are highly prospective for further growth in Mineral Resources as demonstrated by the recent maiden Mineral Resources at NE Mango 2 and Ophion.
