Sandpiper project partners in share storm
UCL Resources, developer of the controversial US$400 million phosphate marine project off the Namibian coast, has tabled an audacious off-market takeover bid for joint venture partner Minemakers, offering one new share for every 1.6 Minemakers share plus 4.5 cents cash.
The UCL offer comes after Minemakers made a takeover offer to acquire UCL, offering 13 Minemakers shares for every 10 UCL shares held. The Minemakers offer closed at 7pm (Sydney time) on Tuesday without any takers despite UCL’s own independent expert having said that the Minemakers offer is fair and reasonable to UCL shareholders.
In the meantime, the Minemakers board has recommended to its shareholders to reject the unsolicited takeover bid of the company’s 100% shareholding.
UCL says it plans to fund the Minemakers offer through a A$9 million convertible note agreement with Mawarid Mining and from cash reserves, one of the reasons given for the rejection of the bid.Minemakers argues that the planned convertible note to be used to fund the cash component of the UCL offer is not an attractive instrument. “ It will introduce unrequired debt with an interest rate of 7.5% and an 18 month term.” The company added that the instrument will also result in further dilution of UCL shareholders when the debt is either repaid or converted.
Minemakers further argues that the offer is not conditional on achieving a 100% outcome which leaves open the possibility for complicated cross-shareholdings. Minemakers already holds a 14 % stake in UCL Resources
Despite the recommendation to reject the UCL offer, Minemakers remains willing to discuss and agree a fair transaction which combines UCL and Minemakers to the benefit of both sets of shareholders.
But while the joint venture partners are engrossed in their scrip tug of war, the phosphate project has come under attack with local lobby groups saying the findings of the environmental impact assessment studies which concluded that the marine phosphate mining operations – a first of its kind in the world – will have minimal environment impact are questionable and inconclusive.
“Namibia will have to provide the testing ocean for this type of mining – a guinea pig for a world first and be a world leader for the wrong reason. This is not a matter to be solely the concern of Swakopmund and Walvis Bay and their inhabitants.
“It must concern every Namibian. However, smooth talk by the proponents of the project companies blur the vision of ordinary Namibians and then fail to recognise what is really at stake and who will eventually have to pay the price,” lobby group, Swakopmund Matters said recently.
The Sandpiper project is based on a marine phosphate deposit situated about 60km offshore and 150km south of Walvis Bay in water depths of 180 to 300m. Minemakers owns 42.5% shares in the Sandpiper project, while Union Resources Limited own 42.5%. Local partner, Tungeni Investments owns 15.0%.
Once operational, the project could produce 3 million tonnes of marketable rock phosphate concentrate per annum