Shares in West Perth-based Titan Resources Ltd shot up 28 per cent after resource player Consolidated Minerals Ltd announced an off market takeover offer for the nickel company.
Shares in West Perth-based Titan Resources Ltd shot up 28 per cent after resource player Consolidated Minerals Ltd announced an off market takeover offer for the nickel company.
At market close, Titan's share price was up 1.6 cents to 7.4 cents, while Consolidated Minerals' share price was up 7 cents to $2.79.
Below is the full announcement:
Consolidated Minerals Limited (ASX: CSM, AIM: CNM, FSE: CMN) today announced an off-market takeover offer for nickel company, Titan Resources Limited (ASX: TIR), further advancing its nickel growth strategy in the Kambalda region of Western Australia.
The consideration offered for all Titan's outstanding ordinary shares is one (1) Consolidated share for every thirty-five (35) Titan shares. This translates to an offer of 7.77 cents for each Titan share based on the $2.72 closing price of Consolidated's share price on 27 March 2006. The Offer will be made through Consolidated's wholly-owned subsidiary, Consolidated Nickel Pty Ltd. The Offer consideration represents an attractive premium of 34% to the closing price of Titan shares on 27 March 2006 and 41% premium to the volume weighted average price for Titan shares in the month leading up to this announcement. The Offer values Titan at approximately $29 million on an undiluted basis.
The Offer, whilst targeting the acquisition of 100% of Titan, has no minimum acceptance condition but is subject to a number of standard conditions as set out in Annexure A.
Consolidated is already Titan's largest shareholder, with a relevant interest of 19.9%, and holds strategic nickel interests in joint venture with Titan including 50/50 joint ventures at the Munda and Armstrong nickel projects in the Widgiemooltha Dome region, immediately south east of Consolidated's existing nickel operations at Kambalda.
Titan's assets include a strategic 227km2 tenement position at Widgiemooltha containing resources totalling approximately 123,000t of contained nickel in eight separate deposits, including Armstrong (554,237t at 1.77% Ni), McEwen (3.35mt at 1.35% Ni), Widgie Townsite (2.08mt at 1.89% Ni) and Munda (256,000t at 1.94% Ni). In addition, Titan controls a large land position including the historic Carr Boyd nickel-copper mine (815,000t @ 1.11% Ni), located 80km north-east of Kalgoorlie.[1]
Consolidated's Executive Director and incoming Managing Director, Rodney Baxter, said the proposed acquisition of Titan represented a further step in the Company's nickel growth strategy at Kambalda, augmenting our existing nickel exploration and development pipeline in one of the world's premier nickel regions.
"The proposed acquisition will enable us to realise full value from our existing investment in, and strategic relationship with Titan by consolidating control of a large strategic ground position spanning both the Kambalda and Widgiemooltha Domes, augmenting our nickel resource base and further enhancing our depth of nickel exploration expertise and development opportunities in this region," Baxter said.
Consolidated operates the 5,000tpa Beta Hunt nickel mine at Kambalda and is nearing completion of the nearby East Alpha development project, which will consolidate a 9-10,000tpa nickel production base. The Company's growth strategy is based on increasing production to a target level of 20-25,000tpa by expanding the Kambalda operations and developing additional production centres within the broader Kambalda and adjacent Widgiemooltha regions.
Consolidated's Managing Director, Michael Kiernan, said nickel would be the key growth driver for the Company in the future. The acquisition of Titan is consistent with our strategic objectives. "Consolidated brings the balance sheet strength and cash flow required to accelerate the exploration and development of Titan's nickel assets to take advantage of the current strong nickel price cycle. The acquisition will enable Consolidated to secure control of a substantial nickel resource base with the potential to underpin construction of the Company's own nickel concentrator in this region," he said.
Kiernan said the offer consideration represented an attractive premium for Titan shareholders and provided the opportunity to retain exposure to the future upside of the Titan nickel assets but as part of a large, diversified minerals group with strong earnings and an excellent track record of delivering shareholder returns.
"Titan shareholders who accept will benefit from Consolidated's proven track record in delivering on its growth strategy and they will avoid the risk that Titan may be required to undertake further discounted capital raisings," Kiernan said.
ENDS
OFFER TERMS AND ADDITIONAL INFORMATION
Consolidated's offer is one (1) Consolidated share for every thirty-five (35) Titan shares on issue. Based on the closing price of Consolidated shares on 27 March 2006, the day prior to the announcement, of $2.72 the value of the Consolidated scrip consideration is equivalent to 7.77 cents per Titan share. This represents an attractive premium to the level at which Titan shares were trading prior to the announcement of Consolidated's offer, namely:
- a 34% premium to the closing price of Titan shares of 5.8 cents on 27 March 2006
- a 40% premium to the volume weighted average price for Titan shares for 5 days prior to the date of this announcement;
- a 41% premium to the volume weighted average price for Titan shares for the month prior to the date of this announcement.
Based on Titan's register immediately prior to this announcement, the total consideration for the ordinary shares not currently owned by Consolidated is approximately 8.6 million Consolidated shares. Using the closing price for Consolidated shares on 27 March 2006 the day prior to the announcement, this represents a total consideration of $23.4 million for the securities subject to the offer.
Consolidated's Bidder's Statement is expected to be lodged with the Australian Securities and Investments Commission (ASIC) in the next few days and mailed to Titan shareholders shortly thereafter. This document will contain details of the Offer and information regarding acceptance.
Consolidated has been advised on this transaction by Perth-based Argonaut Capital Limited and Perth-based law firm Steinepreis Paganin as legal adviser.
BACKGROUND INFORMATION - CONSOLIDATED MINERALS LIMITED
Consolidated is a diversified, ASX S&P 200 Australian-based resource group (ASX: CSM) with a strong growth focus as a supplier of key raw materials to the world's steel and stainless steel industries. The Company is also listed on the AIM of the London Stock Exchange (Code: CNM) and the Frankfurt Stock Exchange (FSE: CMN).
Consolidated has a sound profit base founded on its successful West Australian manganese operations at the Woodie Woodie mine. Woodie Woodie has a secure position as a reliable supplier of 1 million tonnes per annum of high-grade, low-phosphorous manganese ore to markets in Asia and Europe, representing approximately 10% of the world's high-grade manganese exports.
The Coobina Chromite Project, located 80 km south-east of Newman in Western Australia, has increased production to capacity levels of 250,000 tonnes per annum of 42% chromite ore, representing some 2.5% share of the world market. Consolidated's nickel operations are located in the world-class Kambalda nickel district of Western Australia. They currently comprise the Beta Hunt nickel mine and the nearby East Alpha development project together with a portfolio of advanced exploration and development prospects.
The Company has announced an accelerated development program at its Kambalda operations designed to bring the East Alpha project into production during 2006, consolidating a 9-10,000tpa nickel production complex through combined production from Beta Hunt and East Alpha, while continuing to pursue other exploration and growth opportunities in order to reach the target of 25,000tpa nickel production.
Consolidated is also developing a new zinc-copper business through its 32.55% shareholding in ASX-listed mining company, Jabiru Metals Ltd (ASX: JML). Consolidated supported Jabiru's $81.5 million debt and equity funding package, finalised in early 2006, which underpins development of the Jaguar zinc-copper project located in Western Australia.
Jaguar is scheduled to commence production in the June quarter of 2007, producing 20-25,000tpa of zinc in concentrate, 8-10,000tpa of copper in concentrate and 800,000oz of silver in concentrate at world competitive cash operating costs.
Consolidated has a strong track record in the successful and cost-effective development and operation of mining projects. Consolidated is also pursuing a number of growth opportunities including joint ventures and strategic investments in the carbon steel materials sector, including a portfolio of iron ore projects in the Pilbara region of Western Australia.
