Stand-off in Mid West

06/02/2008 - 22:00

Bookmark

Save articles for future reference.

After months of takeover speculation and feuding between Mid West iron ore miners Murchison Metals and Midwest Corporation, the two companies are once again independently pursuing their expansion plans.

Stand-off in Mid West

After months of takeover speculation and feuding between Mid West iron ore miners Murchison Metals and Midwest Corporation, the two companies are once again independently pursuing their expansion plans.

Murchison announced this week that its offer for Midwest Corporation would not be extended, following minimal acceptances of its proposal.

Executive chairman Paul Kopejtka said recent discussions with key shareholders in Midwest had convinced Murchison  there was no realistic prospect in the near future of reaching agreement on terms that would deliver an acceptable outcome.

For its part, Midwest is still trying to reach agreement with its project partner, China’s Sinosteel, which said last year it was considering a takeover offer.

To strengthen its position, Sinosteel last month acquired an 18.7 per cent stake in Midwest.

Midwest said it has recently written to Sinosteel seeking clarification of some aspects of its incomplete, non-binding proposal and further developments were unlikely until a response has been received, which may not be until after the Chinese new year.

Commenting on this scenario, Murchison noted that Sinosteel “also appears to have been unable to reach agreement with the Midwest board to proceed with a takeover offer for Midwest”.

Murchison added that its decision to close its offer was based in part on the fact that Sinosteel has advised Midwest that it does not intend to make an unsolicited takeover offer.

Mr Kopejtka reiterated his view that a merger of Midwest and Murchison was a compelling proposition for shareholders of both companies.

“Jack Hills and Weld Range remain highly complementary projects that have similar ore types, are located in the same geographic region, have similar development timetables and will rely on the same rail and port infrastructure,” he said.

“A combination of the two companies may also have avoided the need for a contestable process to award the rights to construct the new Mid West port and rail infrastructure, thereby expediting the construction of that infrastructure.”

“However, without the support of the board and major shareholders of Midwest there is little point in keeping our offer open.”

Mr Kopejtka said Murchison looked to the year ahead with great confidence.

“The mine, rail and port feasibility studies are progressing very well and the board has growing confidence in those projects and the ability to add value through developing and expanding existing assets, nurturing existing relationships and forging new commercial alliances,” he said.

“Demand for iron ore remains very buoyant and Murchison is strategically positioned as an independent Australian group to participate actively in future industry opportunities”.

Similarly, Midwest’s directors issued a statement expressing confidence in the company’s ability to develop into a diversified iron-ore producer in the Mid West region.

Midwest has major iron-ore tenements at Weld Range, Koolanooka/Blue Hills Hematite, Koolanooka (Magnetite), Jack Hills and Robinson Range, that indicate high quality iron ore deposits.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options