The deal, which was tipped by MiningNews.net last Friday, is more complex than a conventional takeover. It involves a pre-bid “de-merger” of MPI’s gold assets and the transfer of $12 million in cash into a gold-only business called Leviathan Resources that’ll seek to re-list on the stock exchange following a $15 million IPO.
LionOre and MPI said in a joint statement early Monday morning that the offer was pitched at $1 cash plus 0.1675 LionOre shares for every MPI share.
This deal (including the gold de-merger) values MPI shares at $2.48/share, some 43c above the last sale of MPI shares on October 12, and 98c above the MPI share price of a month ago.
The joint statement said that LionOre had already secured a 19.9% stake in MPI through a “pre-bid acceptance agreement”, with two of MPI’s biggest shareholders, Lion Selection Group and Merrill Lynch Investment Managers, as well as with MPI’s chairman, John Gerahty.
Included with the pre-bid deals is a recommendation from the MPI board that the LionOre offer be accepted unless there is a higher offer and assuming the gold de-merger is completed.
The two companies said the de-merger of the gold assets would be via a capital reduction and distribution to MPI shareholders.
The deal means that the ambitious LionOre gets control of MPI’s nickel assets, which include the Black Swan/Silver Swan mine near Kalgoorlie and the Honeymoon Well project in the north-east goldfields – which is at an advanced feasibility development stage.
LionOre said the deal immediately increases its attributable nickel production by around 50% to 30,000 tonnes a year and increases attributable nickel resources from 555,100 tonnes of contained nickel to 1.5 million tonnes, a 170% increase.
The Canadian-Australian company said it proposes to accelerate the Honeymoon Well feasibility studies, with a particular interest being the potential use of LionOre’s Activox hydrometallurgical processing technology. Honeymoon Well has the potential to produce up to 40,000 tonnes of nickel a year.
The gold assets being transferred to the new “son of MPI” include the Stawell goldmine in Victoria and the depleting Coolgardie project in Western Australia.
To be led by MPI executive Kevin Wilson, Leviathan aims to increase the reserve base at Stawell from the current 250,000oz to 400,000oz over the course of 2005, and reduce cash costs from over $400/oz to less than $350/oz. The Coolgardie project will be closed by April-May next year unless sold earlier.
