Australian gold and copper miner PanAust Ltd yesterday rejected an A$1.5 billion ($1.4 billion) takeover bid from Chinese state-owned Guangdong Rising Assets Management, saying that the offer undervalues the company.
Guangdong Rising, which holds 23 per cent in PanAust, had on 10 April tabled a confidential, non-binding, indicative and incomplete proposal to acquire all of the remaining shares for $2.20 per share in cash by way of an off-market takeover offer.
In subsequent discussions, Guangdong Rising revised its offer to A$2.30 per share, a 46-per cent premium to the Brisbane-based company's Monday closing price of A$1.58.
The offer is conditional on Chinese and Australian regulators approving the deal, opportunity to conduct of due diligence and contingent on more than 50.1 per cent of PanAust shareholders tendering their shares to the offer.
PanAust said it advised Guangdong Rising that its offer price ''remains materially below the level at which the board would be prepared to recommend,'' but has granted the Chinese shareholder to conduct due diligence.
PanAust is a Southeast Asia-focused copper and gold producer with a portfolio of organic growth projects in Laos and Chile.
Its producing assets are the Phu Kham Copper-Gold Operation and the Ban Houayxai Gold-Silver Operation located in Laos.
In Chile, PanAust owns the Carmen deposit and holds a majority interest in the nearby Inca de Oro Copper-Gold Project through a joint venture with Codelco.
PanAust's key growth activities in Laos include the KTL (formerly Phonsavan) Copper-Gold Project, and exploration and resource development within the Phu Kham district.
In November 2013, PanAust agreed to buy a majority stake in Glencore International's Frieda River Copper-Gold Project in Papua New Guinea.
PanAust expects to produce up to 75,000 tonnes of copper this year and 90,000 tonnes within five years when its development projects become operational.
The deal comes as Chinese resource companies vie for global copper assets. Last month, Glencore agreed to sell its Las Bambas Peruvian copper project to a Chinese consortium led by China Minmetals Corp for $5.85 billion in cash. (See: Glencore Xstrata sells Las Bambas copper project to Chinese consortium for $5.85 bn)
Last July, Rio Tinto sold its majority stake in the Northparkes copper mine in Australia to China Molybdenum Co, for $820 million. (See: Rio Tinto to sell Northparkes copper mine to China Molybdenum for $820 mn)