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Discovery Metals shuns Cathay Fortune takeover bid

11 Oct 2012

Discovery Metals, the Australian miner focused on copper exploration in Botswana, has rejected an A$824m ($847m) takeover bid from Cathay Fortune Corp (CFC) and state-backed China-Africa Development Fund (CADF), but said it remains open to a higher offer.

Cathay Fortune Corp, the private equity firm founded by Chinese billionaire Yu Yong that already holds a 13.7 per cent stake in Discovery Metals, partnered with the China-Africa Development Fund to table the A$1.70 per share offer last week.

The bid stands at a 16.4 per cent premium to the Australian-listed company’s last traded price preceding the offer. The all-cash deal was backed by a $600m loan from China Development Bank.

“The directors have advised the representatives of CFC and CAD Fund that if they wish to put a new proposal to the board, the board will consider and assess that new proposal on its merits,” the company said in a statement to the stock exchange on Thursday.

Discovery’s directors said the offer failed to reflect the value of the company’s management, operations and expansion plans, exploration potential and “scarcity value” of the business.

The joint venture would be 75 per cent owned by CFC and 25 per cent owned by the CADF.

UBS is acting as financial adviser to the company.

Discovery Metals focuses exploration and production on the emerging Kalahari copper belt in North West Botswana, and has prospecting licenses covering more than 11,800 sq km of the Kalahari belt.

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