Sandpiper JV partner rejects takeover bid

UCL Resources has rejected a takeover bid from Minemakers, a joint venture partner in the Sandpiper Marine Phosphate Project located off the Namibian west coast saying the offer is “inadequate and opportunistic”.
Ian Ross, chairman of UCL Resources urged shareholders this week to reject an offer in which fellow junior mineral explorer, Minemakers was offering nine shares for every 10 UCL Resources  (UCL) shares saying the offer does not reflect the potential value of the company’s 42.5% stake in the Sandpiper project currently believed to be the world’s largest individual marine phosphate resource.
Ross said that the offer will dilute UCL shareholders’ interest in the Sandpiper project which the board considers to be significantly superior to Minemakers other assets.
Both UCL and Minemakers owns a 42.5% stake in the Sandpiper project while local partner, Tungeni Investments owns the remaining 15%. In addition, Minemakers holds 13.1% of UCL shares.
In tabling a bid for UCL, Andrew Drummond, executive chairman of Minemakers, last week argued that the combined group will be in a significantly better position to advance the development and financing of the Sandpiper Project than Minemakers and UCL can independently.
Other benefits to UCL Shareholders, according to Drummond, included avoiding increased dilution risks arising from UCL issuing further shares to raise its share of the Sandpiper Project funding requirement estimated at around U$100 million, and exposure to Minemakers’ significant Wonarah Project located in Australia’s Northern Territory, as well as its portfolio of other high quality assets.
Minemakers’ offer was also at a substantial premium. The offer terms represented a value of A$0.302 for each of UCL shares representing a 58.7% premium to UCL’s last closing price of A$0.190 per share on 10 February 2012.
However , the UCL board was unmoved this week telling shareholders that the offer was inadequate and opportunistic. Chairman Ross said: “The UCL board considers MAK’s ( Minemakers) offer inadequate and opportunistic and unanimously recommends that you reject the offer.”
Ross added that Minemakers had missed several target milestones for its flagship Wonarah phosphate project.
“Mining operations were initially planned to begin in mid – 2010, as stated in its bidder’s statement for Bonaparte Diamond Mines NL, but a bankable feasibility study is yet to be produced and development of the Wonarah Project is currently estimated to be more than three years away.”
Minemakers offer is subject to the company obtaining a minimum 50% interest in UCL Shares and approval by the Namibian Competition Commission.