Territory could raise ConsMins bid
Article Date: Aug 15 2007Michael Kiernan, boss of Territory Resources, says the Australian company ‘reserves the right’ to raise its bid for Consolidated Minerals.
In London to drum up City support for Aussie-quoted Territory’s £400 million bid for AIM-quoted manganese and nickel producer ConsMins, Kiernan, who headed ConsMins until a remuneration row last year, said his backers would support an increase in the cash element of the bid. He claims support from heavyweight Hong Kong metals trader Noble, with seven per cent of ConsMins, Austrian commodities group DCM with five per cent and major Ukrainian manganese producer Privat, with 15 per cent.
ConsMins directors, headed by chief executive Rod Baxter, have so far preferred to recommend a lower, but all-cash, offer from the Pallinghurst group, headed by Brian Gilbertson, formidable ex-chief of BHP Billiton, the world’s biggest mining company. They have cited the volatility of Territory’s shares, down from a 40p equivalent to around 30p.
Kiernan, who alleges ConsMins’ present management has allowed grades of its manganese shipments to China to fall, insists he and his supporters could launch ‘an all-cash offer’ if need be. He also argues Territory's plans to boost iron-ore production in Australia’s Northern Territory should make its shares attractive in the long term.
Kiernan says Privat, a world-scale manganese producer, has always needed high-grade manganese from ConsMins’ Woodie Woodie deposit in Australia to raise its own low-grade product to environmentally acceptable standards. He has been talking to Privat and observers do not rule out the possibility of a Ukrainian participation in the Territory bid.
At 138.5p, down 3.5p today on Territory’s recent price weakness in Australia, ConsMIns shares remain well above our October recommendation. They could rally if Territory manages to up its terms.
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