Aztec Resources Ltd has again recommended the rejection of a takeover bid from Mount Gibson Iron Ltd, after securing credit approval for a $100 million finance facility to fund development of the Koolan Island Iron Ore project.
Aztec Resources Ltd has again recommended the rejection of a takeover bid from Mount Gibson Iron Ltd, after securing credit approval for a $100 million finance facility to fund development of the Koolan Island Iron Ore project.
A company announcement issued this morning says the credit approval provides a strong foundation to enable completion of construction and commencement of operations at the project, hence the company has returned to its recommendation that the offer be rejected.
This comes two days after the company issued 77.7 million shares to royalty and repurchase rights holder Australian Royalties Corporation for exclusive rights over the Koolan Island project, at a price of 22.5c each.
Aztec shares at 22.5c at 0925 WST today.
When he spoke to WA Business News on Tuesday, Mount Gibson managing director Luke Tonkin said the board would reconsider the offer, of 26.5c per share, in the light of today's funding announcement.
The full text of the Aztec announcement is pasted below
Aztec Resources Ltd is pleased to announce it has received credit approval from the banking syndicate for its $100 million finance facility to fund the continued development of the Koolan Island Iron Ore Project.
The banking syndicate comprises:
- Westpac Banking Corporation;
- Bank of Scotland International (Australia) Limited; and
- The Bank of Tokyo-Mitsubishi UFJ Ltd.
The $100 million facility will consist of:
- a senior debt facility of $54 million (to be drawn down in US$ and repaid in Aztec's US$ revenues);
- a cost overrun facility of $10 million (to be drawn down in US$);
- a working capital facility of $30 million; and
- an environmental bond facility of $6 million.
As previously announced, the facility will be used to meet the balance of development expenditure commitments and ongoing working capital requirements for Aztec's Koolan Island Iron Ore Project.
Aztec Chairman Ian Burston said:
"Securing credit approval has been widely anticipated by the market and represents a significant milestone in Aztec's development as an iron ore producer. Securing a $100 million finance facility is a major vote of confidence in Aztec's Koolan Island Iron Ore Project and the Aztec management team from a syndicate of large and well credentialled banks.
Aztec is now well positioned to deliver a high quality iron ore project to its shareholders which is on track for the commencement of mining and stockpiling of ore by the end of the year and first shipments in early 2007."
The first tranche of the facility of approximately $20 million is expected to be available for drawdown on Tuesday, 31 October 2006 subject to meeting typical conditions precedent, including execution of formal facility documentation. The remainder of this facility will be available for drawdown as soon as a condition subsequent relating to the final environmental approval has been met. This approval is expected to be obtained within the next two weeks.
Takeover Update
The credit approval provides a strong foundation to enable completion of construction and commencement of operations at the Koolan Island Iron Ore Project. Accordingly, Aztec directors have no reason to change their previous recommendation and continue to recommend that shareholders REJECT the inadequate offer from Mount Gibson.
Aztec Directors are of the opinion that the majority of Aztec shareholders continue to support Aztec and its Directors' recommendation. Mount Gibson has extended its takeover offer for Aztec four times and as at 25 October 2006, had received acceptances of 1.65 per cent (excluding acquisitions and acceptances from Aztec's previous major shareholder Cambrian Mining Plc.
Following receipt of the credit approval, Aztec has requested that the suspension of trading in Aztec's shares be lifted with immediate effect.
