Emerging iron ore producer Brockman Resources has urged shareholders to reject a $932 million takeover bid by Hong Kong listed Wah Nam.
Emerging iron ore producer Brockman Resources has urged shareholders to reject a $932 million takeover bid by Hong Kong listed Wah Nam.
Brockman is hoping to eventually produce 17 to 20 million tonnes of iron ore each year from the Pilbara region.
Wah Nam is a mining and transport company with a market capitalisation of about $8.51 billion.
Today, Brockman Resources chairman Barry Cusack said his company's directors were unanimously urging shareholders not to accept the offer.
"Being a scrip offer with a foreign exchange and involving a simultaneous bid for FerrAus makes this a complicated bid to analyse and assess," Mr Cusack said.
He said the problems with the bid related to the depth and underlying value of Wah Nam stock.
Wah Nam's lack of mining development expertise and operational experience also counted against the bid, Mr Cusack said.
Shares in Brockman closed up seven cents at $6.07.
Wah Nam has offered six Wah Nam shares for each FerrAus shares in its concurrent bid.
Wah Nam already owns about 19.9 per cent of FerrAus.
The bid values FerrAus at about $230 million.
See Brockman Resources
The year under review was a very significant one for Brockman as Wayne and I outlined in the Annual Report.
Since that was prepared we have completed the Definitive Feasibility Study (DFS) for Marillana which has shown it to be a technically and financially robust project, with good marketability of product and sound financial returns at pricing considerably below the current market for seaborne traded iron ore.
Wayne will shortly update you on this and other current developments.
Of course the main development since we issued the Notice of Meeting is the receipt of a takeover offer last week. Wah Nam, a listed Hong Kong company, has offered 30 of its shares for each Brockman share. The offer is conditional and with minimum acceptance of 50% o issued Brockman Resources shares.
Wah Nam has also made a con current bid for FerrAus, one of our Alliance partners in the North West Iron Ore Alliance (NWIOA) developing the port facilities at Port Hedland.
Being a scrip offer with a foreign exchange and involving a simultaneous bid for FerrAus makes this a complicated bid to analyse and assess and your Directors have worked diligently with our advisors, UBS, and legal team, Freehills, to present you with our recommendation.
I advise that your Directors unanimously recommend that shareholders do not accept the bid as it stands.
Our analysis of the bid and the reasons for our recommendation will be contained within our Target Statement which will be sent to all shareholders.
In short, our recommendation relates to the depth and underlying value of Wah Nam stock, Wah Nam's lack of mining development expertise and operational experience and the uncertainties of proposed actions to complete the mine and associated infrastructure to realise the value of the Marillana Project outlined in the DFS.
Irrespective of the merits of the bid it does demonstrate that we have a very attractive project and prospect.
I now invite Wayne to update you on them.
