Elemental talks could lead to $190m bid

Shares in Elemental Minerals leapt on the ASX today after the company received a non-binding takeover offer from a Hong Kong investment group.

Although the offer remains non-binding, incomplete and conditional, Elemental said negotiations with Hong Kong's Dingyi Group could result in a formal offer of 0.66 cents for each of its shares, valuing the Perth-based potash explorer at more than $190.4 million.

That offer would be a premium of 126 per cent to Elemental’s volume weighted average share price for the past 20 days.

At 11:30AM, WST, Elemental shares were up 34.3 per cent, trading at 47 cents.

Dingyi Group is an investment company with a portfolio of interests based mainly in Hong Kong and China.

Its chairman, Chinese 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.

“The board of Elemental looks forward to working closely with Dingyi over the coming month to progress the proposal,” Elemental said in a statement.

Any formal offer would not be subject to finance, Chinese regulatory or Foreign Investment Review Board approval, although it would be subject to a 50.1 per cent minimum acceptance condition, Dingyi shareholder approval and other standard conditions.

Elemental’s major shareholder, Pala Investments, and John Stalker’s Fiducs Limited hold 13.6 per cent of the company and have indicated their support for the proposal.

BMO Capital Markets is acting as Elemental’s financial adviser, while its legal counsel is Corrs Chambers Westgarth and Stikeman Elliott.