Nothing wrong with this. Increase Copper reserves at a discounted price thanks to a smart move in buying up the ownership from Tech under a pre-bid agreement.
KAGARA is looking to boost the resource base of its north Queensland zinc/copper business through a hostile $14.2 million takeover bid for Copper Strike, owner of the undeveloped Einasleigh copper project.
The off-market cash bid of 11? a share compares with Copper Strike's last sale price of 9.5? a share.
Copper Strike, which is based in Melbourne, is expected to argue that the bid undervalues the Einasleigh asset. It is a stock-exchange compliant resource of 16.1 million tonnes, grading 0.98 per cent copper (157,000 tonnes contained).
Advertisement: Story continues below But some fancy footwork by Kagara enables it to launch the bid with its foot on 17.22 per cent of Copper Strike.
The bulk of that comes from a pre-bid agreement on a 16.7 per cent stake in Copper Strike held by Canada's Teck.
Teck only moved from 7.4 per cent of Copper Strike to 16.7 per cent last month. The increase was due to Copper Strike acquiring Teck's remaining rights to Einasleigh, as well as the Walford Creek project, in return for the issue of 13 million Copper Strike shares.
Teck has now turned around and, in effect, sold the lot to Kagara under the pre-bid arrangement.
Kagara's chairman, Kim Robinson, said Kagara held the only ''logical'' development and processing options for the Einasleigh deposit.
Kagara is fully funded for the bid, having recently raised $20 million from a share placement to Singapore's Prosperity Steel.
Kagara's biggest shareholder, with nearly 20 per cent, is the Chinese state-owned company Guangdong Foreign Trade Group.
KZL Price at posting:
68.5¢ Sentiment: None Disclosure: Not Held
