Indophil board endorses takeover by Chinese firm

MANILA, Philippines - Indophil Resources NL board members said they have “unanimously” voted to urge shareholders to accept an offer by the Chinese Zijin Mining Group Co. Ltd. to take over Indophil’s 37.5 percent stake in Sagittarius Mines, Inc.’s (SMI) Tampakan copper-gold project in the southern Philippines.

Xstrata Copper, which holds a 62.5 percent controlling interest in SMI, had expressed its support to the proposed takeover offer by Zijin.

In a statement, Indophil chairman Brian Philips said the Zijin offer “is an excellent outcome which unlocks value for Indophil’s shareholders from the company’s minority ownership position in the world-class Tampakan copper-gold project.”

Philips said “Zijin is well positioned to fund its share of Tampakan’s capital expenditure estimate of $5.2 billion.

Zijin’s offer values Indophil’s share at A$545 million on a fully diluted basis and represents an 18 percent premium to the closing price of Indophil shares as of Nov. 26, 2009.

Xstrata had earlier revealed  that it had reached an agreement with the Zijin Mining Group  regarding Xstrata’s  19.9 percent stake in Indophil, subject to certain conditions.

SMI president Peter Forrestal said his company would welcome the introduction of a party, such as Zijin Mining Group, that has the capacity to support the advancement of the Tampakan project.

“The Zijin Mining Group is a well-established international mining company with a focus on the exploration and development of gold and base metals.

“Their interest in Indophil demonstrates the potential of the Tampakan project which is one of the largest undeveloped copper-gold deposits in South East Asia .

“We remain focused on completing the Tampakan project feasibility study in the first half of 2010 and finalizing specialist studies and stakeholder engagement activities for the EIA in the second half of next year,” Forestal said. 

Indophil said in its statement that it has agreed with its Philippine partner, Alsons Corp., to immediately accelerate Indophil’s acquisition of Alson’s 3.27 percent interest in the Tampakan project.

The acceleration of the acquisition has the effect of enabling Zijin to acquire Alson’s 3.27 percent interest in the Tampakan project as well as Indophil’s 34.23 percent interest.

Indophil is being advised by Gresham Advisory Partners Limited, Freehills and Baker & McKenzie, while Zijin is being advised by Charltons Hong Kong and Minter Ellision.