11/11/2010 - 08:39

Wah Nam bid $1.2b for junior miners

11/11/2010 - 08:39

Bookmark

Upgrade your subscription to use this feature.

Hong Kong listed Wah Nam International has launched a conditional off market takeover offer for emerging iron ore producers Brockman Resources and FerrAus valued at about $1.2 billion.

Wah Nam bid $1.2b for junior miners

Hong Kong listed Wah Nam International has launched a conditional off market takeover offer for emerging iron ore producers Brockman Resources and FerrAus valued at about $1.2 billion.

The mining resources company owns about 23 per cent of Brockman via a subsidiary and has made the takeover offer for all the shares in the company it does not already own.

In a statement to the Australian Securities Exchange, Brockman said Wah Nam had offered 30 of its shares for every one Brockman share.

Wah Nam is currently trading at 21.74 cents on the Hong Kong Stock Exchange making the bid is worth $6.52 per Brockman share or $932 million.

The represents a premium of approximately 38 per cent.

Brockman has advised its shareholders not to take any action.

Meanwhile, Wah Nam has offered six Wah Nam shares for each FerrAus shares, which it already owns about 19.9 per cent of.

This bid values FerrAus at about $230 million.

This is a 51 per cent premium on the company's closing price yesterday.

FerrAus has also advised its shareholders not to act on the offer.

Senior resources analyst with Hartleys, Andrew Muir, said the bids were likely Wah Nam trying to consolidate the two iron ore juniors, so they could justify building a train line to export their production.

He said there were a number of so-called "stranded" iron ore juniors in the Pilbara, which included Brockman and FerrAus.

"They don't have access to BHP, Rio or Fortescue's railway lines, so their deposits are effectively stranded," Mr Muir said.

"They can't mine them or export them, so what they need to do, and we have been expecting this to happen for a while ... is to have sufficient critical mass to be able to justify the infrastructure to mine and export these deposits.

"Putting two of these companies together is one way to do that, and it makes sense from a logistics perspective," he said.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options