Shares in Territory Resources have soared after the Perth-based iron ore explorer announced a friendly $0.48 per share takeover offer from South African diversified commodities group Exxaro Resources.
Shares in Territory Resources have soared after the Perth-based iron ore explorer announced a friendly $0.48 per share takeover offer from South African diversified commodities group Exxaro Resources.
At 2:10PM (WST) Territory's stock had skyrocketed 57 per cent, to trade at $0.44.
The offer values Territory at $123 million, and represents a 64 per cent premium to its closing share price on Friday of $0.28 per share.
Exxaro's offer supersedes talks Territory was holding with Hong Kong-based commodities trading house Noble Group in relation to a debt-to-equity proposal announced in May.
Territory and Noble had entered into a non-binding agreement for the conversion of $US20.7 million under a secured debt term facility into ordinary shares at $0.45/share.
Exxaro has also agreed to provide, via South Africa-based FirstRand Bank, financing support up to $US36 million.
"The cash offer also provides certainty of value for Territory shares and an opportunity for shareholders to realise their investment in Territory shares for cash," Territory said in a statement to the ASX.
The offer includes a minimum 60 per cent acceptance condition and Territory must come to an agreement relating to the termination of outstanding loan arrangements with Swan Gold Limited, under which Territory is entitled to receive at least $6.7 million in cash.
Exxaro said it would finalise and distribute its bidder's statement around early June.
"Territory's assets provide an excellent match to Exxaro's stated objective of gaining operational exposure in iron ore," Exxaro chief executive Sipho Nkosi said.
"Territory represents a reasonably sized opportunity which will allow Exxaro to leverage its bulk commodity and iron ore beneficiation expertise.
"At the same time the offer allows Territory shareholders to realise an attractive cash price at a considerable premium to the market value."
Territory owns and operates the Frances Creek iron ore mine in the Northern Territory.
The company lodged a $9.9 million interim net profit in March, down from $13.7 million net profit in the previous corresponding period because of the severe wet season in northern Australia.
Exxaro, South Africa's second-largest coal producer, is currently undertaking an aggressive acquisition program to increase its exposure to iron ore.
It recently took a 20 per cent interest in China-based Sishen Iron Ore Company.
Exxaro also participates in the Tiwest minerals sands 50:50 joint venture with Tronox Western Australia.
