Hong Kong investment house Dingyi Group has made a formal $190 million takeover offer for Perth-based explorer Elemental Minerals.
Under the offer, which was initially flagged as a possibility in April, Dingyi will pay 66 cents for each Elemental share.
At 11:20AM, WST, Elemental’s stock was up 23 per cent, or 10.5 cents, at 56 cents.
The Dingyi offer remains subject to a number of conditions, including a 50.1 per cent minimum acceptance caveat, and Dingyi shareholders must also approve the transaction.
As part of the takeover deal, Dingyi has also agreed to subscribe for $5 million worth of Elemental shares at 34.07 cents each and provide $15 million in finance through a convertible loan facility to provide working capital to work through the bid.
Elemental’s board has unanimously recommended shareholders accept the offer, while director Ian Stalker and his private company Fiducs Limited, as well as the company’s largest shareholder, Pala Investments, had entered into pre-bid purchase agreements with Dingyi for their 13.6 per cent combined stake.
“It provides Elemental shareholders with an opportunity for an immediate liquidity event at an attractive premium and at a time when capital markets are depressed and access to capital is proving difficult,” Elemental chairman Sam Middlemas said.
“Importantly, the Dingyi offer is not subject to funding and does not require Chinese government approvals or FIRB approval.”
Dingyi’s portfolio of assets are based mainly in Hong Kong and China, while its chairman, entrepreneur Li Kwong Yuk, also controls a number of significant mainland China firms in the infrastructure, real estate and natural resources sectors.
Elemental Minerals’ flagship project is its Sintoukola potash development, located in the Republic of Congo.
It covers 1,436 kilometres of land considered highly prospective for potash and associated salts.