CBH Shares Slide on Weaker Nyrstar Bid

Submitted by Jim Thesiger on 11 January, 2010 - 15:34

Australian base metal explorer and producer CBH Resources (CBH) , which mainly focuses on searching for zinc, silver and lead with operations in three Australian base metal districts, declared that it has received a takeover bid from Belgian zinc metal producer Nyrstar for 13.5 cents per share. The offer worth around $148 million in total. Nyrstar, one of the biggest Zinc Metal Producers of Europe will be able to get access to its own supplies of materials if the takeover bid is successful. However, the CBH authority stated that it is currently holding confidential talks with multiple parties and those discussions were neither complete nor sufficiently definite to warrant disclosure. The company has appointed RBC Capital Markets and Clayton Utz for consultation regarding the Nyrstar tilt and for making recommendation to the CBH board. The shares of the metal explorer fell by 1.5 cents to 13 cents during the early afternoon trade. According to Alex Passmore, Patersons head of metals and mining, the drop occurred due to the relatively weaker Nyrstar offer.

It is to be mentioned that Nyrstar was established during 2007 when Belgium based Umicore merged with Zinifex of Australia in a joint venture. Nyrstar had to look for alternative ore suppliers following an unexpected halt of shipments by Australia based Century zinc mine which stopped the shipments for repairing a pipeline. CBH Resources will be able to boost up its production to 850,000 tonnes from its Central Australian mine in mid 2010 as the miner reactivated its equipments which were idled during 2008. Zinc futures are currently being traded at around $US2555 per tonne.

Earlier, a CBH takeover bid over Australian zinc miner Perilya got fended off by China based zinc miner Zhongjin Lingnan as it took as much as 50.1 percent stake in Perilya. CBH Resource stated that detail financial work on the Nyrstar bid was completed over the Christmas and New Year break. The transaction is conditional on the convertible notes of CBH at no more than $750 for each note, with consideration in either Nyrstar shares or Nyrstar convertible notes or cash. Nyrstar was established during 2007 when Belgium based Umicore merged with Zinifex of Australia into a joint venture