Metals X puts pressure on Aditya

The battle for control of Aditya Birla Minerals has intensified, with bidder Metals X extending its $68 million takeover offer to late February while accusing the target of lacking transparency around expenses.

Metals X has extended its off-market takeover offer for all the shares it doesn't already own in Aditya to February 24, after waiving a minimum 90 per cent acceptance condition on Wednesday.

The gold miner said it had now received 396 acceptances from minority Aditya shareholders, equal to 39.6 per cent of the minority shareholding in the target, or 19.29 per cent of the total shareholding.

Metals X chief executive Peter Cook said the Aditya board must now fully inform shareholders as to the full financial position and prospects of the company and the outcomes of the strategic review process it has chosen to undertake so that shareholders can make an informed decision on the offer.

“In terms of the majority shareholder Hindalco Industries, which has so far rejected the offer in favour of the strategic review process, our door is open and we are prepared and willing to have discussions with them as with all shareholders of Aditya,” he said.

“Our offer is good for them, providing a premium in terms of value and a substantially better opportunity for extended copper production and offtake than the approach currently being taken by the Aditya board in the stewardship of Aditya’s assets.”

Metals X has also accused Aditya of mining at grades “significantly above its published JORC resource and reserve grades in what appears to be a process of high-grading to temporarily increase cash flow” in its quarterly report released yesterday.

“Whilst this brought cash flow into the past quarter, high grading inevitably diminishes the value of the remaining reserves and can cause serious future mine planning issues,” Metals X said.

“And despite this increased cash flow, overall the total cash balance of Aditya decreased by $4.26 million at the end of the quarter.”

Metals X also said Aditya had only presented the operating costs for its Nifty gold mine.

“Metals X believes that in the background of a takeover offer and in the interests of enabling its shareholders to make informed decisions, the Aditya board should be disclosing in a transparent manner its total cost of sales, its exposure to QP adjustments in the falling copper price environment, and the true net cash position of the company after working capital and accruals for liabilities,” it said.

But Aditya hit back strongly, saying orebodies by their nature were variable and the mine plan the company was following at Nifty had been developed with the assistance of independent consultants to maximise the value of the mine.

“We are continuing to follow that plan. It is wrong to suggest that Aditya is high-grading the mine,” Aditya said.

“We have commenced the second stage of the strategic review and are in discussions with a number of parties who are undertaking due diligence.

“As previously stated, we expect to conclude the strategic review by the end of the March quarter.”

That would be a month after Metals X’s extended deadline.

“Any proposal arising from the strategic review will be put to our shareholders for approval and we urge shareholders not to accept the Metals X offer,” Aditya continued.

Metals X said the strategic review had now run for over three months in parallel with its firm takeover proposal.

“In order to permit Aditya minority shareholders to make appropriate and informed decisions concerning their ownership interest, Metals X believes the Aditya board should immediately make full disclosure as to the outcome of the now-completed first stage strategic review, and inform the minority shareholders whether, in the board’s opinion, there is any realistic prospect of a firm superior offer, and if so, by what date,” it said.

Metals X also called on Aditya to reveal the true cost it is accruing on the strategic review.

Metals X shares closed 1 per cent lower to $1 each, while Aditya shares lost 5 per cent of their value, closing at 19 cents each.