Brisbane’s Metro Mining Ltd. said on Wednesday that the board of Gulf Alumina Limited confirmed its offer to buy all outstanding Gulf shares was superior to the proposal offered by Moly Mines Limited.
Metro, which has a 39.3% stake in Gulf at present, says that the purchase of the remaining Gulf shares represents a “logical opportunity” to tap into over A$200 million in synergies between the two firms’ projects. Among them is the Bauxite Hills project, which is owned by Metro and located immediately adjacent to Gulf’s bauxite project at Skardon River in Cape York.
According to the press release, Metro’s offer is subject to its relevant interest in Gulf’s shares rising above 51% while the offer is under consideration. The offer is open to consideration until December 5, 2016.
Metro indicates that Moly’s offer, which was submitted to Gulf on September 22, is of lesser value, would offer none of the synergies mentioned above, is highly conditional in nature, and requires the approval of government bodies including Australia’s Foreign Investment Review Board and the Australian Securities Exchange. The firm also posits that the conditions prevailing in the offer are not within the control of Moly Mines and, as a result, may be difficult to satisfy.
As it stands at the present time, per the offer implementation agreement between Gulf and Moly, the latter has until Tuesday to match Metro’s offer. Gulf’s board may recommend to shareholders that Metro’s offer is superior to Moly’s after that date if Moly fails to match it.
Metro Mining is based in Brisbane, and began life when it was spun off from Cape Alumina Ltd. upon its takeover by MetroCoal Ltd in 2014. The firm has exploration rights in over 500 square miles of western Cape York, which is second to only Rio Tinto Alcan. Its primary asset is its Bauxite Hills Project, which is expected to yield up to four million metric tons per annum.