Copper explorer Discovery rejects Chinese PE firm Cathay Fortune's $850-mn bid

Australia-listed but Botswana-focused copper explorer Discovery Metals Ltd yesterday rejected a A$824 million ($850 million) bid from Chinese private equity firm Cathay Fortune Corp and China-Africa Development Fund as inadequate, but said that it is open to a higher offer.

Chinese billionaire Yu Yong controlled Cathay Fortune, which already holds 13.7 per cent in Discovery, last week offered to pay A$1.70 per share in cash for the remaining shares, a premium of 17 per cent to Discovery's 4 October closing price of A$1.46 (See: Chinese PE firm Cathay Fortune to buy copper miner Discovery Metals for $850 mn).

Post deal, Cathay said that it would hold 75 per cent of Discovery and China-Africa Development Fund backed by state-owned China Development Bank would hold the remaining 25 per cent.

Discovery is a copper exploration and production company focused on the emerging Kalahari Copperbelt in north-west Botswana.  The Brisbane-based company produces copper at its wholly owned Boseto Copper Project, which is similar to the well-known and large deposits of the Central African Copperbelt of Zambia and the Democratic Republic of the Congo.

Discovery has prospecting licences covering 11,872km and has a production capacity of 36,000 metric tons of copper and 1.1 million ounces of silver annually and has plans to increase copper production to 50,000 tonnes per annum by increasing life of the mine from 15 years to 25 years.

The company also holds a controlling stake in the Dikoloti Nickel Project in north-east Botswana.