[miningmx.com] – FIRESTONE Energy urged shareholders to turn down a R270m bid for the company saying it was not reasonable and did not compensate them for the strategic value of the Waterberg Joint Venture – a proposed $400m thermal coal project in South Africa’s Limpopo province.
It said the offer was “inadequate, highly conditional and opportunistic”. This was owing to the fact that it was a share-based offer and required shareholder approval for other aspects of Firestone including raising finance and the takeover of Ariona, a shareholder in Firestone which earlier helped shore up its under-funded balance sheet.
In December, it emerged that gold exploration firm, Range River Gold, was to bid for Firestone offering one share for every two Firestone Energy shares.
The offer represented a 25% premium to Firestone Energy’s December 13 close, valuing the company at A$30m or R270m. Range River Gold then had a market capitalisation of A$6.2m or R54m.
A 50.1% majority of Firestone Energy shareholders is required for Range River’s bid to be successful.
A conditional heads of agreement has already been signed between Range River and Ariona Company, a specially created vehicle constructed to recapitalise Firestone Energy’s balance sheet with A$40.7m in convertible notes.
The notes would redeem A$20.3m in existing notes which, combined with a bid to buy some of the shares owned in Firestone by the firm’s empowerment partner, Sekoko Resources, would present Ariona with a 25.7% in Firestone Energy.
Ariona also undertook to invest directly in the Waterberg Joint Venture as well as help arrange $400m in finance needed to build the mine which has an adjusted production target of 10 million tonnes/year (Mtpa) by 2019 of thermal coal for use by Eskom.
In March, Sekoko signed a memorandum of understanding with Eskom on a 30-year supply agreement, in terms of which the Waterberg Joint Venture would commence delivering 2Mtpa to the power utility in 2014.
Were Range River Gold’s bid for Firestone Energy be successful, it would have an effective 70% over the project leaving Sekoko Resources with a 30% stake. Range River Gold would also change its name to Waterberg Coal Company.
Range River is chaired by Brian McMaster who, apart from being a registered liquidator, is also a turnaround specialist of some 20-years standing involving 12 ASX-listed companies, according to a career summary on the website of Caravel Energy, an Australian-listed company of which he is also chairperson.
