08/07/2008 - 09:41

Midwest directors accept Sinosteel offer

08/07/2008 - 09:41

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Four Midwest Corporation Ltd directors have decided to accept Sinosteel Corp's takeover offer, a day after its merger with Murchison Metals Ltd was called off.

Midwest directors accept Sinosteel offer

Four Midwest Corporation Ltd directors have decided to accept Sinosteel Corp's takeover offer, a day after its merger with Murchison Metals Ltd was called off.

Chairman Jesse Taylor and directors Francis Ng, Steven Chong and Stephen de Belle, representing 4.1 per cent of Midwest shares, have planned to accept Sinosteel's $6.38 cash offer.

The acceptance puts Sinosteel on the cusp of gaining control of Midwest, with its stake to increase to 49.7 per cent.

Only two Midwest directors, Dato David Law and Datuk Roger Tan who together hold 13.1 per cent, have yet to decide.

In a statement issued this morning, Midwest reaffirmed its support for a merger with Murchison which was called off yesterday after failing to gain support of Sinosteel. The Chinese company currently holds a 45.6 per cent interest in Midwest.

"Midwest continues to believe that in the medium to long term, the potential additional value created by a merger with Murchison would be substantial and the strategic logic of the merger remains compelling," Midwest said.

"Midwest looks forward to an ongoing relationship with Murchison both as a significant investor on the Midwest share register and as the owner of adjacent mining interests in the Mid West region of Western Australia."

Murchison currently holds a 10 per cent interest in Midwest and yesterday said it would not accept Sinosteel's offer.

Today Midwest directors gave two recommendations to its shareholders.

For investors with a shorter-term investment Horizon, Midwest directors recommended that shareholders either accept Sinosteel's offer or sell shares on market at prices above Sinosteel's $6.38 offer, if available.

Alternatively, Midwest directors also recommended for shareholders with a longer-term investment horizon to retain their Midwest shares.

Meanwhile, Midwest has announced that the completion of the prefeasibility study into its Weld Range iron ore project will be delayed until January 2009.

Midwest chief executive Bryan Oliver said the delay was due to time required to complete drill analysis.

"The data analysis requires some additional time but we remain confident that the Bankable Feasible Study (BFS) will be completed by December 2009, meaning that the mining, rail and port infrastructure timetable is not affected", Mr. Oliver said.

"Drilling for the PFS was substantially completed in May 2008 as scheduled. The Weld Range project is still substantially on schedule, apart from this further minor extension of a month. The delay has not led to additional costs and the studies remain within budget."

Earlier this year Midwest announced drilling delays at Weld Range due to the effects of abnormally high rainfall and difficult drilling ground conditions.

Shares in Midwest last traded at $6.39 at 11:49AEST

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