South Africa's Exxaro Resources has confirmed its bid of up to A$338 million for Australia’s African Iron.
Buying African Iron would give Exxaro ownership of the Mayoko and Ngoubou-Ngoubou projects, located in the Republic of Congo in central West Africa.
African Iron’s key asset is its 92 per cent interest in Mayoko, which currently has a JORC-compliant mineral resource of 121 million tonnes of iron ore. The project has an existing under-utilised, heavy haulage mineral railway passing within two kilometres of the main prospect and terminating at the port of Pointe-Noire.
African Iron also holds 85 per cent of Ngoubou-Ngoubou, which is contiguous with Mayoko.
Exxaro said the offers are in line with its objective of expanding into the iron ore sector, which it described as having positive fundamentals in the medium- to long-term. With in-house expertise and experience in mining bulk ore commodities, the company has been actively pursuing opportunities to increase its exposure in iron ore and said that African Iron presents an attractive platform for further growth in the commodity.
Commenting, CEO of Exxaro Sipho Nkosi said: “African Iron’s assets provide an excellent match to Exxaro’s stated objective of gaining operational exposure in iron ore. African Iron represents a reasonably sized opportunity, which will allow Exxaro to leverage its bulk commodity and iron ore expertise. At the same time the offers allow African Iron shareholders the opportunity to realise an attractive cash price at a considerable premium to the market value.”
Key to the outcome of the bid will be one of African Iron's major shareholders, Equatorial Resources, which owns the neighbouring Mayoko-Moussondji project. Equatorial bought a 19.99 per cent stake in African Iron last year.
Exxaro has already received approval from Australia's Foreign Investment Review Board, as well as South African approvals.
With a market capitalisation of approximately R61.8 billion, Exxaro mines, extracts and processes a range of minerals and metals, including coal, mineral sands and base metals, primarily in South Africa, Australia and China.
Exxaro is one of the largest South African coal producers with capacity approaching 48 million tonnes per annum, and the third-largest global producer of mineral sands products.
The company holds a 20 per cent interest in the Sishen Iron Ore Company, which operates the Sishen and Thabazimbi mines in South Africa.