South African miner Exxaro Resources said it had bid $130-million in cash for Australia’s Territory Resources, as part of its plan to expand into iron ore mining.
Exxaro, a diversified miner and one of South Africa’s largest coal producers, said it had offered $0.46 (Australian dollars) per Territory share, representing a 64% premium to the last closing price.
The deal values Territory at $123-million, Exxaro said in a statement.
Territory currently produces approximately 1.6-million tonnes of lump and fine direct shipping ore. It also owns rights to iron ore tenements and has access to China via the port of Darwin, Exxaro said.
Territory said a majority of its board had recommended them to accept the offer and that the deal had support from a major shareholder, DCM DECOmetal.
As part of the agreement, Territory has ended talks with another firm, Noble, about a potential deal.
Exxaro said it was actively pursuing opportunities to increase its exposure in iron ore and believed the Australia operation provides a platform for growth in the commodity.
“Territory represents a reasonably sized opportunity, which will allow Exxaro to leverage its bulk commodity and iron ore beneficiation expertise,” Exxaro chief executive Sipho Nkosi said in a statement.
RMB Corporate Finance, a unit of South Africa’s FirstRand, and Greenhill Caliburn advised Exxaro on the deal, while Azure Capital advised Territory. — Reuters