Deadline for Boseto Mine takeover extended

Staff Writer | Wednesday May 1, 2013 00:00

 

In a second target statement released last week, Discovery Metals indicated that an ore reserve model had over-estimated the amount of sulphide ore and underestimated the amount of oxide and transitional ore in the Zeta open pit ore body, for the material mined to the end of December last year.

Discovery also said its cash cost for the six months ended December 31 was $4.28 a pound (0.45 kilograms), compared with the $1.28 a pound average estimated in its feasibility study, because of lower ore grades and higher energy costs.With the new ore reserve and cash costs information, Cathay announced on Wednesday that it is evaluating the new information and its bid offer will now be extended by seven days to February 15.

The Chinese bidder, owned by billionaire Yu Yong, said the seven-day extension would provide it time to discuss its requirements to conduct due diligence, in order to understand and address its concerns.

'The new and material disclosures included in the second supplementary target's statement raise material concerns,' Yu Yong said in today's statement. 'The extension will provide time for Cathay Fortune Investment Ltd. to discuss with Discovery its requirement to conduct appropriate due diligence in order to understand and address these concerns.'

 According to Bloomberg, Discovery was headed for its biggest drop in three and a half years in Sydney after the bidder extended its offer period for a third time and sought more discussions.

The stock fell as much as 12 percent to A$1.15 and traded 10 percent lower, poised for its biggest decline since April 2009, as of 1:58 p.m. local time. The lowest intraday level today is 32 percent below the A$1.70 apiece offer price. On the Botswana Stock Exchange (BSE), Discovery was trading at P10 by the end of Wednesday trading as the stock continues to take a battering over the takeover tussle.

The stock price has been on a weakening trend from an average of P13.60 mid October to around P12.30 last week. The company has set a minimum acceptance condition of 51 percent, which means it only needs just over 37.3 percent support to buyout other shareholders.