06/12/2007 - 11:13

Midwest up, Murchison down on takeover updates

06/12/2007 - 11:13

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Shares in takeover target Midwest Corporation Ltd rocketed 12 per cent higher today after the company disclosed that it was in discussions with "parties interested in pursuing corporate transactions".

Midwest up, Murchison down on takeover updates

Shares in takeover target Midwest Corporation Ltd rocketed 12 per cent higher today after the company disclosed that it was in discussions with "parties interested in pursuing corporate transactions".

In contrast, shares in its would-be acquirer Murchison Metals drifted lower despite the release of a substantially increased iron ore resource at its flagship Jack Hills project in the Mid West region.

In a brief statement, Midwest said it would pursue the discussions but was unsure of the outcome.

"The Directors of Midwest, in consultation with their advisers, will explore these transactions and continue to keep shareholders informed. There is no certainty that these discussions will lead to a transaction."

The statement implies that Murchison, which is backed by Japan's Mitsubishi Corporation, could face competition from a new bidder wanting to gain control of Midwest.

One possible party is Chinese company Sinosteel Corporation, which has been planning a joint venture development of Midwest's Weld Range hematite and Koolanooka magnetite iron ore projects in the Mid West region.

Murchison launched a scrip takever offer in October, offering one of its shares for every 1.08 Midwest shares. At the time the offer was launched, it valued Midwest at about $1 billion but Murchison has struggled to gain support.

Murchison's share price has drifted to $3.89 since the offer was launched.

Midwest's share price jumped to about $5.00 after the offer was announced, then dropped to less than $4.00. It has rocketed higher again this week, rising 71 cents in two days to $4.72 per share.

Midwest's board said it continued to recommend that shareholders take NO ACTION in relation to Murchison's Offer.

Meanwhile, Murchison has claimed that its revised JORC compliant mineral resource highlighted the potential and quality of its Jack Hills project.

The JORC compliant mineral resources at Jack Hills has been increased by 58 per cent to 153 million tonnes. It comprises 69.6 million tonnes of Direct Shipping Ore @ 60.3% Fe, and 83.4 million tonnes of beneficiation feed @ 42.3% Fe.

"To confirm a 58% increase in resources barely three months after the last reported update is an achievement that highlights the quality and potential scale of the Jack Hills Project," Murchison's executive chairman Paul Kopejtka said.

He anticipated further upgrades as the company continued its drilling program. The company's target is to have a resource of 375 million tonnes, so that it can proceed with its plan to mine 25mtpa for 15 years.

 

 

 

 

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