China Kingho Energy Group, a private Chinese company, has made a US$ 60 million bid for Australian metallurgical coal exporter Carabella Resources Ltd.
Carabella, which last week reported an initial JORC reserves estimate of 11 million t for the Bluff PCI project in Queensland, has already said it has received interest from a number of other parties.
Kingho’s bid is part and parcel of a wider trend as Chinese companies look to purchase cheap Australian coal assets, which are at a lower cost than usual because other companies are avoiding buying stakes in a sector that is experiencing a glut for thermal coal and metallurgical coal amid concerns over high production costs.
Shares in Carabella Resources rose by 120% to a high of AU$ 0.45/share, which indicates investors may be holding out for a higher bid, according to Reuters.
“Carabella is one of the few [metallurgical] coal development plays and we expect additional bids for Carabella to emerge,” Lawrence Grech, analyst for PhillipCapital, said in a note.
Wealth Mining, a unit of Kingho, made the US$ 60 million bid on Thursday 4 December, after acquiring 11% of Carabella’s shares and failing to get a response from the company’s board to an all-cash takeover offer of AU$ 0.42/share, valuing the group at AU$ 66 million.
“We wish to acquire Carabella as an important first step in Kingho’s strategy to develop an Australian headquarters for our global resources and development business outside of China,” Kingho chairman and founder, Qingua Huo, said in a statement.
UBS is advising Carabella on the best course of action to take, and the company said it would respond to Kingho’s offer in early 2014, telling shareholders to take no action.
The bid by Kingho was opportunistically timed, according to PhillipCapital, coming just as Carabella was poised to receive some key approvals for its coal projects.
The company has undertaken a five hole in-filling drilling programme to enable further resource delineation, as well as conversion from inferred resources category into mineable reserves.
The company has filed an Environmental Authority (EA) application for the Bluff coal project under the Queensland Government’s new Green Tape Reduction process. The EA will be assessed under a six-stage approvals proves by the Department of Environment and Heritage Protection.
Kingho, which has eight coal mines and produces gas and fuels from coal, has already secured approval from China’s National Development and Reform Commission for the bid and expects to receive two other required Chinese approvals.
The offer is due to close on 20 January 2014, and the bid does not need to be cleared by Australia’s Foreign Investment Review Board.
Edited from various sources by Sam Dodson
Read the article online at: https://www.worldcoal.com/coal/05122013/carabella_resources_subject_of_chinese_bid_322/