CI suggests merger with phosphate miner

Christmas Island miner Phosphate Resources says it will not support a proposed merger with shareholder CI Resources, which also wants to incrementally lift its stake in the unlisted public company.

In a letter to shareholders today, the directors of Phosphate Resources advised that 41.74 per cent shareholder CI Resources, intended to increase its shareholding by 3 per cent each time in the first and third quarters of 2010.

Phosphate Resources said that if CI acquired a further 3 per cent, it would have absolute control of the company.

"It is of the view of the independent directors that such an acquisition is not in the best interest of the remaining shareholders as it will have the effect of reducing the liquidity and the value of their shares," Phosphate said.

"CI Resources Ltd has also advised that they wish to consider merging the two companies if they complete the proposed two further 3% creeps.

"The independent directors advise that they are unlikely to support any merger proposal which does not provide at least an NTA valuation per share to the remaining shareholders."

As at November 30 2009, Phosphate Resources' unaudited net tangible asset valuation stood at $67.1 million, or $19.60 per share.

Shares in CI closed down one cent to 87c today.