The Swiss group intermediation of raw materials, which is the largest shareholder since July and requested one last extraordinary general meeting of shareholders to gain control of the board and management of the mine , buy a 1.35 percent and reaches 19.35 stake in Emed Mining. This is listed in London and Toronto firm that owns the mining rights to Rio Tinto (Huelva). The Canadian securities laws is precisely that forces launch a takeover bid (OPA) if a shareholder exceeds 20 percent stake in a company. The capital reinforcement occurs prior to its conclusion at a future date to be determined, said special meeting. To achieve its objective of controlling Rio Tinto, which would mean that Trafigura would assume its fourth mine in Huelva (after Dyed Water, Magdalena and Sotiel), the group needs the support of two key stakeholders: the background Orion (USA) and the refiner Chinese copper XGC. Both shareholders, with shares of 14 percent, with financial and supply of copper concentrate signed Emed commitments in recent years related to the provision of funding to promote the reopening of Rio Tinto. The compliance of the likely new owner (Trafigura ) of these commitments, or negotiating new ones that satisfy both parties is key . Liabilities Specifically, Orion has provided funding totaling 29 million euros in various operations, most recently last August. Of this, about 10 percent of -3.25 million euros are participating loans (convertible into equity) due in January 2015. At that time, Emed must pay a coupon of between 9 and 11 percent or that the shareholder exercises the conversion. XGC, meanwhile, has 9 million in loans granted, also convertible into shares, whose term expires on the same date and with a coupon on the same level of profitability. In addition, under the agreements signed with Emed in 2012, XGC has the right to refine around 25 percent of production of copper concentrate future Rio Tinto during the first ten years of operation of the mine (estimated lifetime He is 15 years with identified reserves today). This strengthening of the presence of Trafigura, through its subsidiary in Rio Tinto Urion HOLDINGS occurred on November 3, just a day before the Andalusian announced that extends to the first quarter of 2015 the deadline for approving the project mining for reopening the deposit. The Andalusian has so far not publicly expressed support, but not repair, the takeover of Rio Tinto by Trafigura .
I completely agree, the of take agreement is nice but EMED has, to verify the underground mine resources JORC compliant, explores the unexplored areas they have rights over, explores down to 2000m as they're licensed to and gets the tailing dam joint venture running. Would you hand something that large over to the direct competition? Would you want to lose out on the benefits of being a long term supporter when EMED comes good? I think XGC are playing the long game which is why they bought in early and helped EMED grow. They invested not just in what EMED has, but what they potentially have and the benefits of a close relationship with them. I would rather XGC bought EMED if it had to be sold as I think they have acted honorably from the start, which to me counts for something but maybe I'm just old fashioned that way.
Good afternoon Morgan, I agree entirely with your post. However, Traf could make an offer of cash and agree that XGC could keep their off take agreement. Personally, as you say, I think it would take more than this. XGC have been invested here a long time, they would not simply hand everything over to Traf without a substantial gain IMO. Traf recently increasing their holding strengthens my belief they have not been successful in gaining the support of XGC or Orion. I am sure there will be a few more twists and turns, but I am convinced we will see our rewards here.
I don't think the fact that Trafigura will own the mine can be questioned. Firstly they own enough shares to put a spanner in the works of any other bidder. Second they already have bought a good chunk of EMED cheaply so can afford to be more generous in any offer they make. I think the deciding factor will be XGC and Orion, Trafigura's offer will have to be high enough that it is worth their while. If it is I think PIs will have little say in the matter. That said XGC are in the same business as Trafigura and to lose the benefit of their off take agreement as well as handing over a large asset to a rival, will require quite some compensation.
FE I don't think it is unreasonable to expect the final T/O price to be around 25p / 30p. With current shares in issue this equates to approx £360m / £430m. We have had indications that the infrastructure alone would cost north of £500m to build from scratch, and that's before we start to price in the copper, and let's not forget the silver ! ;-).
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