Chinese group bids $126m to mop up Perilya

Perth-based silver, lead and zinc miner Perilya has received a takeover offer from its major Chinese shareholder, Zhongjin Lignan Mining.

Perilya said today that Zhongjin, which holds a 53 per cent stake in the company, had offered it 35 cents per share to acquire the remaining stake it does not already own.

The offer values Perilya at around $269 million, with Zhongjin set to pay $126 million to acquire the remaining shares in the Perth-based target.

Perilya shares were trading as low as 16 cents in early August, but gained 43 per cent on the ASX today to finish trade at 31.5 cents.

The company’s independent directors said they unanimously supported the Zhongjin proposal.

The takeover remains subject to shareholder approval, as well as Foreign Investment Review Board and Chinese regulatory approval.

Ernst & Young Transaction Advisory Services will prepare an independent expert’s report on the offer.

Perilya managing director Paul Arndt said shareholders considering taking up the offer should consider the company’s likely capital requirements for the ramp-up of its Potosi mine near Broken Hill, and the introduction of a new processing circuit at the Cerro de Maimon operation in the Dominican Republic.

“In the current market, where both debt and equity markets are depressed, and in the absence of this proposal proceeding, it is likely that additional funding required would come through some form of equal access equity offering to Perilya shareholders,” Mr Arndt said in a statement.

Zhongjin said it intended to continue to support Perilya’s current operations if the takeover was successful.

The Chinese company also intends to expand the operations where possible, including the Potosi mine as well as the neighbouring North mine in Broken Hill.

All key personnel at Perilya’s Australian and Dominican Republic operations will also be retained.