Sierra says take no action yet

Sierra Rutile has advised its investors to not take any action following news that the mineral sands producer has received an on-market takeover offer from US-based Gerald Group, which owns bidder PRM Services, a fellow American company. 

Shares in Sierra rose by 34 per cent on Wednesday morning to 10 cents, as of 11.17am AWST. 

The offer follows Sierra suspending operations at its Area 1 site in the Moyamba and Bonthe districts of Sierra Leone on March 11, with 25 per cent of its workforce to be made redundant. 

This suspension was due to the Sierra Leone government's decision to renegotiate terms within its third amendment agreement with the company, which would result in a fiscal regime change.

Under the government's fiscal amendment, which was revert back to what was enforced betwen both parties on November 20 2001, Sierra would be required to pay a considerable amount to the government for the 2023 financial year.

Sierra posted a $20.7 million net loss after tax for its 2023 full year, after making a $75.6 million profit in 2022. Additionally, its revenue fell from $254.5 million to $176.3 million, due to multiple factors.

Earlier this month, a company spokesperson told Business News that the situation was challenging but was hopeful the situation would improve.

"The suspension of operations and redundancies are in response to both weak market conditions and uncertainty regarding the fiscal regime," they said.

"Together, these factors have arguably led to the company’s operations at Area 1 no longer being economically viable as evidenced by our recently announced financial results.

"We are hopeful the suspension of operations will be brief and that an agreement can be reached with the Government on an appropriate fiscal regime that would again support production alongside supportive rutile market conditions.

"As a major employer in Sierra Leone, we informed the government about the redundancy program as required under legislation and before ceasing operations.  We are continuing to engage with the government on this matter."

Sierra told the market on Tuesday that its Board will consider PRM's offer and announce its recommendation accordingly, however noted that any Sierra shareholders who sold their shares to PRM now would be unable to participate in future offers, should an increased price occur from either PRM or a rival bid.

The Theuns de Bruyn-led company has appointed Gresham as its financial adviser, along with King & Wood Mallesons as its legal adviser.