[miningmx.com] — NO BETTER offer for Riversdale Mining (Riversdale) has been made since Rio Tinto launched its $3.9bn takeover bid for the company on December 23.
That’s according to the Riversdale board of directors who, in a Target’s Statement published on Monday, said they “are not aware of any party having an intention to make such a proposal’.
There has been widespread market speculation that Rio Tinto might face a counter-bid, either from Indian steel group Tata or from a consortium of Indian state-run companies.
Tata owns 24% of Riversdale as well as 35% of the Benga coal project, the most advanced of Riversdale’s two coal developments near Tete in central Mozambique.
Tata’s representative on the board – NK Misra – initially abstained from the board’s decision to recommend the Rio Tinto bid to shareholders.
Misra has now modified his stance and has recommended the offer to shareholders “in his capacity as a director of Riversdale’.
But he has stated his vote in favour does not reflect Tata’s position as Riversdale’s largest shareholder. Tata reserved all its rights in relation to its response to the offer.
The Riversdale Target Statement also declared that Tata does not have the right to take over 100% of the Benga project in the event of a change of control at Riversdale, should the Rio bid succeed.
The statement detailed the capital costs of the Benga and Zambeze projects, and the enormous logistical problems that have to be dealt with to get the coal to export markets.
The first phase of Benga to produce 2 million tonnes (mt) per year of saleable coal for export will cost “at least’ $325m, excluding the rail and port infrastructure.
Stages two and three at Benga would add a further 12mt/year of saleable coal at an additional cost of $615m. About 10mt of that coal would be exported.
Riversdale said it expected the infrastructure enabling export of 2mt/year through Beira via the rehabilitated Sena rail link to be in place from the second half of 2011.
The company said the Sena line would have total anticipated export capacity of 6mt/year, of which it had a contracted right to supply 2mt/year.
That capacity estimate was challenged as being way too optimistic in October 2008 by AMCI Capital executive Egon Mauss.
AMCI Capital at that time owned Minas Moatize, which was the only operating coal mine in Mozambique.
In May last year AMCI sold Minas Moatize to AIM-listed junior Beacon Hill Resources and exited Mozambique because of its concerns over the length of time it would take to solve the country’s infrastructure problems.
A number of alternatives are being looked at to expand coal export capacity beyond the 6mt/year level. These include further expansion of the Sena line and the port of Beira, barging down the Zambezi River and the development of the Nacala railway corridor and port.
The barging proposal is controversial, but Riversdale said it believed it could start barging down the Zambezi at an initial rate of 1mt/year from the first quarter of 2013 “and increase progressively thereafter’.
But Riversdale added there was no assurance at this stage that barging would be “economically feasible’.
Brazilian resource giant Vale, which is developing its Moatize mine at Tete, has already indicated its preference to develop the Nacala corridor.
Riversdale’s directors said: “Any infrastructure solution will require significant funding, either from the Mozambique government, Riversdale or other users of the infrastructure or third party providers.
“The commercial viability of Riversdale’s Benga and Zambeze projects will be materially impacted if an appropriate infrastructure solution cannot be secured.’
