Vulcan Resources will not proceed with offer, says MC Mining
Vulcan offer was higher than one from a consortium of investors represented by Goldway Capital Investment
12 March 2024 - 16:45
by Lindiwe Tsobo
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Australia-based MC Mining tumbled 10% on Tuesday on the JSE after Vulcan Resources said it was walking from the A$81.58m deal to buy MC Mining.
Last week, MC Mining which holds coal mining assets in SA, reported it received a letter from Vulcan Resources outlining a nonbinding proposal to make an off-market cash takeover offer for all the shares in the company.
Vulcan proposed to make an off-market cash takeover offer at an indicative price of A$0.17-A$0.20 a share, valuing MC Mining at A$69.34m-A$81.58m.
Vulcan is the operator of the Moatize Coal Mine in Mozambique, the largest coking coal mine in Africa. Coking coal is a key ingredient in the smelting process.
The Vulcan offer was higher than one from a consortium of investors represented by Goldway Capital Investment of A$0.16 cash for each share, valuing MC Mining at A$65.3m.
In a statement on Tuesday, MC Mining said Vulcan’s intention not to proceed does not alter the Independent Board Committee’s recommendation to shareholders not to accept the Goldway Capital Investment offer.
MC Mining has called on shareholders to reject the Goldway proposed buyout offer, saying it was “opportunistically timed to deprive [shareholders] of future potential value” of the group’s assets.
The junior miner relies on the Uitkomst colliery in KwaZulu-Natal for cash generation, but its flagship project is the development of the capital-intensive Makhado project, which would be SA’s only producer of hard coking coal.
Distinct from thermal coal used in power stations, coking coal — and hard coking coal, in particular — is a premium product used in steelmaking.
The Makhado project has been in the pipeline for the past decade, but MC Mining has been battling to secure funding for the project.
In its statement last week, MC Mining said Goldway’s offer price failed to recognise the value attributable to the “shovel-ready” Makhado project, which has a 28-year life of mine and a net present value of R6.8bn.
By 1pm local time, the company’s share price had fallen the most in more than a week, down 14.29% to R1.80.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Vulcan Resources will not proceed with offer, says MC Mining
Vulcan offer was higher than one from a consortium of investors represented by Goldway Capital Investment
Australia-based MC Mining tumbled 10% on Tuesday on the JSE after Vulcan Resources said it was walking from the A$81.58m deal to buy MC Mining.
Last week, MC Mining which holds coal mining assets in SA, reported it received a letter from Vulcan Resources outlining a nonbinding proposal to make an off-market cash takeover offer for all the shares in the company.
Vulcan proposed to make an off-market cash takeover offer at an indicative price of A$0.17-A$0.20 a share, valuing MC Mining at A$69.34m-A$81.58m.
Vulcan is the operator of the Moatize Coal Mine in Mozambique, the largest coking coal mine in Africa. Coking coal is a key ingredient in the smelting process.
The Vulcan offer was higher than one from a consortium of investors represented by Goldway Capital Investment of A$0.16 cash for each share, valuing MC Mining at A$65.3m.
In a statement on Tuesday, MC Mining said Vulcan’s intention not to proceed does not alter the Independent Board Committee’s recommendation to shareholders not to accept the Goldway Capital Investment offer.
MC Mining has called on shareholders to reject the Goldway proposed buyout offer, saying it was “opportunistically timed to deprive [shareholders] of future potential value” of the group’s assets.
The junior miner relies on the Uitkomst colliery in KwaZulu-Natal for cash generation, but its flagship project is the development of the capital-intensive Makhado project, which would be SA’s only producer of hard coking coal.
Distinct from thermal coal used in power stations, coking coal — and hard coking coal, in particular — is a premium product used in steelmaking.
The Makhado project has been in the pipeline for the past decade, but MC Mining has been battling to secure funding for the project.
In its statement last week, MC Mining said Goldway’s offer price failed to recognise the value attributable to the “shovel-ready” Makhado project, which has a 28-year life of mine and a net present value of R6.8bn.
By 1pm local time, the company’s share price had fallen the most in more than a week, down 14.29% to R1.80.
tsobol@businesslive.co.za
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