Directors of Polaris Metals have recommended its shareholders accept an off-market takeover bid worth up to $67 million from mining services outfit, Mineral Resources, subject to an independent expert assessment and in the absence of a superior offer.
Directors of Polaris Metals have recommended its shareholders accept an off-market takeover bid worth up to $67 million from mining services outfit, Mineral Resources, subject to an independent expert assessment and in the absence of a superior offer.
The all scrip offer is based on one Mineral Resources share for every 12.5 Polaris shares and is valued at 38 cents per Polaris share based on Mineral Resources' last traded share price on Friday 14 August.
The deal is potentially worth up to $67 million.
A separate offer will be made in respect of all Polaris options currently on issue.
Mineral Resources managing director and executive chairman, Peter Wade said the offer provides all Polaris shareholders with the opportunity to gain exposure to a significantly larger and more diversified company with the funds, resources and capability to advance Polaris' deposits into production in a relatively short timeframe and in an extremely cost effective manner using proven methods.
"Mineral Resources' Board is confident that combining the businesses and assets of Mineral Resources and Polaris and potentially realising the upside offered by the combined group, with its exposure to the Asian markets, will be a dramatic value driver for the shareholders of both Polaris and Mineral Resources," Mr Wade said in a statement.
In a statement, Polaris said the offer represented the culmination of a comprehensive process undertaken by its board to identify the optimal route for the development of its Yilgarn Iron Ore Project and other projects in the Yilgarn and Pilbara.
Major Polaris shareholder Heron Resource has entered into a pre-bid acceptance agreement with Mineral Resources in respect of a 19.9 per cent shareholding.
And Mineral Resources announced a six per cent drop in profits after tax falling to $44.3 million in the year to June 30 after posting $47.1 million the prior year.
Prior to impairment charges the company reeled in a profit of $49.6 million, an increase of three per cent on the previous fiscal year despite the volatiltiy caused by the global financial crisis.
Mr Wade was pleased with the results give the difficulties in the market thanks to the downturn.
"Our strength is that we are a farily diversified business," Mr Wade told WA Business News.
"Our contarcting operations supplement our commodities operations so in most situations we have the ability to ride out the cycles better than other mining services."
Mr Wade confirmed that if the scrip for scrip offer is taken up in its entirety, which would equate to approximately 178 million shares, the proposal is worth up to $67 miilion.
Full Mineral Resources announcement below:
MINERAL RESOURCES LIMITED ANNOUNCES TAKEOVER OFFER FOR POLARIS METALS NL
Mineral Resources Limited (Mineral Resources - ASX: MIN) today announced its intention to make an off-market takeover bid to acquire all of the issued shares in Polaris Metals NL (Polaris - ASX: POL).
The all scrip offer is based on one (1) Mineral Resources share for every 12.5 Polaris shares (Offer). The Offer is valued at AUD$0.38 per Polaris share based on Mineral Resources' last traded share price on Friday 14 August 2009 (being the last trading date prior Polaris entering a trading halt) (Implied Offer Price).
A separate offer will be made in respect of all Polaris options currently on issue, whereby Mineral Resources will offer to exchange the Polaris options for comparable Mineral Resources options. Details of the Polaris options offers will be set out in Mineral Resources' bidder's statement.
Highlights
The highlights of the Mineral Resources Offer include:
Based on Mineral Resources' 5 day VWAP*, the Implied Offer Price represents:
- a 26% premium to Polaris' closing share price of AUD$0.30 on 14 August 2009.
- a 34% premium to Polaris' 5 day VWAP of AUD$0.28
- a 42% premium to Polaris' 30 day VWAP of AUD$0.27
- a 53% premium to Polaris' 3 month VWAP of AUD$0.25
- a 77% premium to Polaris' 6 month VWAP of AUD$0.21
- Polaris shareholders who accept the Offer will enjoy the future benefits associated with the Mineral Resources' shareholder dividend policy, which provides that 50% of the profits will be distributed to Mineral Resources' shareholders by way of dividends**.
* to 14 August 2009.
** Shares issued under the Offer will not be entitled to receive the final Mineral Resources dividend for FY2009.
- Polaris shareholders who accept the Offer will benefit from the culmination of receiving additional exposure to the benefits that flow from Mineral Resources' substantial mining services and base metal sales to China while also maintaining exposure to the benefits to be derived from exploiting Polaris' Iron Ore assets in a cost effective manner utilising Mineral Resources' existing infrastructure and proven methods.
- Polaris shareholders have the added reassurance that the Offer has the unanimous support and recommendation of Polaris's Board of Directors, and they intend to accept the Offer in relation to the Polaris shares and options held or controlled by them***.
- Major Polaris shareholder Heron Resource Limited (Heron) has entered into a pre-bid acceptance agreement with Mineral Resources in respect of 19.9% of the issued capital of Polaris, confirming that Heron accepts the Offer in relation to those shares.
A compelling offer
Mineral Resources believes the Offer is compelling for Polaris shareholders for the following reasons:
- The Offer represents a substantial premium to Polaris' trading price and VWAP.
- Polaris shareholders will gain exposure to Mineral Resources' substantial and profitable portfolio of diverse mining services, Iron ore and Manganese operations.
- Mineral Resources will provide increased liquidity and institutional support with greater access to capital markets.
- Mineral Resources has a proven track record of developing projects with innovative fast track solutions in an extremely cost effective manner through its history of owning and operating long term, low cost operations.
- The Mineral Resources Group operates one of the most substantial on-highway mine to market supply chain in WA and is currently the third largest exporter, by volume, of base metal product through Port Hedland to the Asian markets.
- Mineral Resources has a highly experienced Board and Management team, whose proven performance will be applied to develop Polaris' Iron Ore assets in a cost effective manner.
- Polaris shareholders who accept the Offer reduce their exposure to the inherent risks and uncertainties currently facing Polaris, including volatile commodity prices, development risks, financing risks and market uncertainties.
- The Poondano project that is currently in the development stage will target commencement within the first half of 2010.
***In the absence of a superior offer and subject to the Independent Expert concluding that the offer is fair and reasonable to the Polaris shareholders.
Mr Peter Wade, Managing Director and Executive Chairman of Mineral Resources said:
"Mineral Resources' Offer provides all Polaris shareholders with the opportunity to gain exposure to a significantly larger and more diversified company with the funds, resources and capability to advance Polaris' deposits into production in a relatively short timeframe and in an extremely cost effective manner using proven methods.
"Mineral Resources' Board is confident that combining the businesses and assets of Mineral Resources and Polaris and potentially realising the upside offered by the combined group, with its exposure to the Asian markets, will be a dramatic value driver for the shareholders of both Polaris and Mineral Resources."
Mineral Resources' Offer will be subject to a number of conditions which are set out in Annexure A.
Offer Process
Mineral Resources is in the process of preparing a formal Bidder's Statement which will be lodged with the Australian Securities Exchange and the Australian Securities and Investments Commission in due course.
