Africa-focused Cradle Resources has pulled the plug on a $55 million takeover by joint venture partner Tremont Investments, on the back of proposed changes to certain Tanzanian laws.
Perth-based Cradle, which owns the Panda Hill niobium project in Tanzania, said it terminated the proposed scheme of arrangement with Tremont as a result of newly proposed changes in Tanzanian law, which involve the imposition of a 1 per cent inspection fee on the value of mineral exports by the Tanzanian government.
Tremont in March had offered 33 cents in cash for every Cradle share it didn’t already own. Tremont owned a 19.6 per cent stake in the target at the time.
Tremont is also Cradle’s joint venture partner at Panda Hill with a majority 59.8 per cent stake.
“If the proposed changes are passed, among other things, the Tanzanian government will be entitled to not less than a 16 per cent free carried interest in the shares of all mining companies,” Cradle said.
“Although significant uncertainty exists about the proposed changes, if passed without significant amendment they are likely to have an adverse effect on the project.”
Cradle said the scheme would no longer proceed, with shareholders to retain their stakes in the company as it moves forward with Panda Hill.
“The board will continue to review the implications of the proposed changes of law and termination of the scheme implementation agreement on the company and Panda Hill,” it said.
Cradle shares were unchanged at 31.5 cents each at the close of trade.
Meanwhile, Orecorp told the market today it was reviewing and seeking advice on the proposed law changes in Tanzania, which could potentially impact its Nyanzaga project.
"Based on the company’s preliminary review of the draft legislation, the company believes that, if passed by the Tanzanian parliament without any substantial amendments, the proposed changes may potentially have an adverse effect on the Nyanzaga project," it said in a statement.
"The company will continue to provide further updates in relation to the proposed changes and status of the draft legislation as and when appropriate."
Orecorp shares fell 26.3 per cent to 28 cents at the close.