Shanxi Donghui — a privately held coal and chemical producer founded by two wealthy Chinese brothers based in China’s Shanxi province — has launched a US$145-million, all-cash takeover bid for Inova Resources (TSX: IVA; ASX: IVA; US-OTC: IVHOF), formerly named Ivanhoe Australia.
The offer of A22¢ per share is a 29% premium to Inova’s closing price on the Australian Securities Exchange of A17¢ per share on the day before the offer was made and a 55% premium to its 90-day, volume-weighted average price of A14.2¢.
The offer has the backing of Turquoise Hill Resources (TSX: TRQ; NYSE: TRQ), Inova’s largest shareholder, formerly named Ivanhoe Mines. Turquoise holds 56.2% of Inova’s shares, and entered into a pre-bid acceptance deed for 14.9% of the shares it holds in the company.
Shanxi Donghui’s chairman, Zhang Yaping, and brother Zhang Weidong, noted in a press release that the company has more than US$163 million in cash-on-hand to fund the acquisition and they “look forward to progressing the development of Inova’s mines and growth projects, and managing the inherent risks involved.”
Inova has holdings in the Mt. Isa region of northwestern Queensland. Its Osborne project — which encompasses the Osborne, Kulthor and Starra 276 underground mines — is producing and selling copper and gold to provide cash flow, and earlier this month Inova updated the resource estimate at its flagship Mount Elliott-Swan copper-gold project. Mount Elliott contains an indicated resource of 157 million tonnes grading 0.67% copper and 0.40 gram gold per tonne, and an inferred resource of 107 million tonnes averaging 0.54% copper and 0.31 gram gold.
The company recently updated the market on its exploration programs in northwestern Queensland’s Cloncurry district, where it is drilling large-scale iron-oxide copper gold targets at the Barry and Benmore prospects; investigating a gold target at Confucius, where chip-channel samples reported 1 metre grading 24 grams gold per tonne from one vein set and 2 metres of 11.43 grams gold from another set. Drill holes at a uranium target called Robert Heg have returned intercepts of 24 metres of 0.065% uranium oxide (U3O8) from 16 metres depth, and 13 metres of 0.11% U3O8 from 13 metres depth.
The takeover bid is subject to approval from Australia’s Foreign Investment Review Board, as well as regulatory bodies in China.
The bid comes less than a week after Taiwan’s privately held Formosa Plastics Group said it would invest US$1.2 billion in an iron ore project in Western Australia being developed by Fortescue Metals Group (ASX: FMG; US-OTC: FSUGY) and Shanghai Baosteel Group.
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