07/10/2010 - 10:21

Perilya bids $186m for Canadian miner

07/10/2010 - 10:21

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Chinese-controlled Perth miner Perilya has unveiled a friendly $186 million takeover of Canadian copper miner GlobeStar Mining Corporation that will see the base metals producer spread its wings to the Caribbean and Canada.

Perilya bids $186m for Canadian miner

Chinese-controlled Perth miner Perilya has unveiled a friendly $186 million takeover of Canadian copper miner GlobeStar Mining Corporation that will see the base metals producer spread its wings to the Caribbean and Canada.

Perilya, which is 52 per cent owned by China's Zhongjin Lingnan, today said it would pay $C1.65 per share cash to acquire GlobeStar, which owns the operating Cerro de Maimon copper-gold mine in the Dominican Republic and a major undeveloped lithium project in Quebec.

GlobeStar's directors have backed the deal and have signed a lock-up agreement delivering 48.8 per cent of the company to Perilya.

The bid coincidentally comes the same day that local miners meet with the Don Argus-led panel advising on the design of the federal government's controversial mining tax, which the industry claims has raised the spectre of sovereign risk in Australia and increased Australian miners' interest in overseas assets.

GlobeStar's primary asset is the Cerro de Maimon copper gold mine, which produced 5.3 million pounds of copper, 4800 ounces of gold and 195,000 ounces of silver in the June quarter at a cash cost of US23 cents per pound of payable copper. On current reserves, the mine has a life of seven years.

It also holds a 60 per cent stake in the Moblan lithium deposit in Quebec, considered one of the highest grade undeveloped lithium deposits in the world.

Perilya managing director Paul Arndt said the acquisition would enhance Perilya's portfolio of lead-zinc-silver assets at Broken Hill by adding a profitable open pit copper-gold-silver mine with strong positive cashflow, the potential to significantly extend the mine life, and diversification into copper, nickel and liuthium.

It would also provide an opportunity to pursue new opportunities in Latin America, he said.

Perilya chairman Zhang Shuijian said "the addition by Perilya of another profitable, cash accretive operation significantly de-risks Perilya's reliance on its Broken Hill operations and is in line with the company's strategic plan of pursuing growth through both internal and external opportunities as appropriate."

The move comes two years after Perilya broke off a planned $400 million friendly merger with neighbouring Broken Hill miner CBH Resources before turning to Zhongjin for an emergency capital injection that saved the company from collapse as lead and zinc prices plummeted during the global downturn.

The Dominican Republic, on the island of Hispaniola, is one of the Caribbean's top tourist destinations and adjoins Haiti, one of the world's poorest nations.

Perilya shares were one cent higher at 48 cents after emerging from a trading halt on the announcement of the deal.

 

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