Thursday, August 18, 2022

Discovery Metals tells investors to reject Cathay Fortune bid

Discovery Metals Limited, a mining outfit which is subject to a takeover bid by a Chinese private equity firm, has told its shareholders to spurn advances from Cathay Fortune Corporation (CFC) and China-Africa Development Fund (CAD Fund).

The Botswana Stock Exchange listed company has rejected an unsolicited joint bid from CFC and CAD Fund arguing it undervalued DML, which has assets in Botswana.

However, in a turn of events, the two Chinese firms became hostile as they approached the shareholders directly through a proposal to make an off-market bid through Cathay Fortune Investment Limited (the Bidder) to acquire all the ordinary shares (not currently held by CFC) of Discovery Metals for A$1.70 per share (Proposed Offer).

But Discovery Metals board still views the bid as undervaluing the company, which is now producing copper at Boseto Copper Project near Maun.

The Proposed Offer is unsolicited and follows an indicative, non-binding, conditional proposal received by Discovery Metals from CFC and CAD Fund on 21 September 2012.

On 11 October 2012, the Directors advised representatives of CFC and CAD Fund that the proposal was inadequate and did not reflect, in the context of a change of control, the value of the Company’s operations and expansion plans; the potential to increase the resources on the Company’s tenements through further exploration.
DML argued the strategic value of the company with an operating project and management team in Botswana; and the scarcity value of the Company.

“Accordingly, the Board of Directors recommend that shareholders reject the Offer and take no action in relation to the Offer,” said Gordon Galt, Chairman Discovery Metals Limited.

Discovery Metals’ will release its Target Statement around 22 November 2012. UBS Investment Bank is acting as financial advisor and GRT Lawyers is acting as legal advisor to Discovery Metals.
The Target Statement will set out the view of the Director’s in relation to the Offer and full details and reasons for the Board’s recommendation to reject the Bidder’s Offer.

The 2012 Annual General meeting is due to be held at the Christie Corporate Conference Centre, Teach and Laffite Room, Level 1, 320 Adelaide Street, Brisbane on Friday, 16 November 2012 at 11:00 am (Brisbane time).

Discovery Metals owns Boseto Copper Project in Botswana.


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