Singapore mining entity Bastion Mining has declared victory in its battle for control of ASX-listed Xanadu Mines, announcing its off-market takeover bid is now unconditional after it secured a 55.65 per cent stake in the Mongolian-focused copper and gold explorer.
Bastion committed to declaring the bid unconditional when it hit the 50.1 per cent shareholding threshold to secure majority control. The company quickly accumulated the required shares after tabling its bid for Xanadu in mid-May, with an 8 cents per share offer.
After revealing last week that Chinese mining giant Zijin Mining - a 15.7 per cent shareholder in Xanadu – had accepted Bastion’s offer for its Xanadu holdings, it was a lay down misère that the takeover would succeed.
Zijin, happy to seize the cash on offer, is also Xanadu’s 50:50 joint venture partner in the company’s flagship Kharmagtai copper-gold project in Mongolia – a stake it plans to retain.
Bastion is controlled by 75 per cent owner, Singapore-based investment outfit Boroo Pte Ltd and 25 per cent stakeholder Ganbayar Lkhagvasuren, a current Xanadu director.
Bastion pounced on Xanadu after a planned control deal with Zijin Mining petered out on an exclusivity period the two companies had been using to hammer out terms.
Following Zijin’s acceptance, Xanadu’s independent takeover board committee quickly reaffirmed its recommendation that shareholders accept the Bastion offer without delay, if no superior bid emerged.
The flagship Kharmagtai copper-gold project in Mongolia’s South Gobi region no doubt caught Bastion’s eyes.
The eyebrow-raising resource clocks in at a sensational 730 million tonnes of ore containing 1.6Mt of copper and 4 million ounces of gold.
A recent feasibility study slapped a lofty US$ 930 million (A$1.43 billion) net present value on Kharmagtai, based on a capital investment of US$890 million (A$1.36 billion). The project is tipped to churn out a mouthwatering 80,000t of copper and 170,000 ounces of gold a year, with an impressive operating cost of just 70 cents per pound copper.
The numbers get the thumbs up, with Kharmagtai expected to pay for itself in four years and continue raining cash for almost three decades. It has a projected EBITDA of US$293 million (A$450 million) a year, a nice earn for any companies lucky enough to possess an in-demand project.
With the ownership issue now resolved, it’s time to ‘let the games begin’ to develop Kharmagtai’s copper and gold riches.
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By Craig Nolan
