Chinese firms offer C$679m for Corriente Resources
By: Liezel Hill
29th December 2009
TORONTO (miningweekly.com) – Vancouver-based Corriente Resources has signed a support agreement with two Chinese companies that plan to make a cash takeover bid for the company.
CRCC-Tongguan Investment, which is jointly owned by mining conglomerate Tongling Nonferrous Metals Group and China Railway Construction Corporation, will offer C$8,60 a share for Corriente, valuing the Canadian firm at about C$679-million on a fully diluted basis.
The proposed transaction is the latest in a series of investments by Chinese companies in Canadian-owned mineral resource companies.
Shares in Corriente rose 12,7% on Tuesday, to C$8,51 apiece by 12:49 in Toronto. The offer was announced on Monday but the TSX was closed for a holiday.
Corriente is a copper and gold exploration and development company and its most advanced asset is the Mirador copper/gold project in Ecuador, where it has completed a feasibility study.
The company said that the agreement with CRCC-Tongguan was the culmination of an extensive review of strategic alternatives over the last two years.
Although Corriente has been looking for potential buyers for some time, the company has been clouded by uncertainty over mineral regulations in Ecuador, which froze all mining and exploration activity last year.
The government has since drawn up and put in place new mining legislation and Corriente said in November it had received a formal notification from the Ministry of Non-Renewable Natural Resources that advanced work could resume on the Mirador project.
The takeover offer, which has the support of Corriente's board, will require regulatory approvals, including from the Chinese government, and acceptance by at least two-thirds of Corriente shareholders.
All officers and directors of Corriente, who collectively hold about 12% of the company, have entered into lock-up agreements with CRCC-Tongguan, under which they have agreed to tender their shares to the offer and that they will not support any rival offer unless it represents a superior proposal.
"We are pleased to have reached an agreement with CRCC-Tongguan, who is committed to bringing their vision of responsible mining development to Ecuador,” said Corriente CEO Ken Shannon.
“The Mirador and Panantza - San Carlos copper projects will require large scale capital investment by CRCC-Tongguan to unlock the infrastructure development, social benefits and jobs that will flow to the people of Ecuador.”
By 14:13 on Tuesday more than 11,7-million Corriente shares had changed hands, making it the most traded stock on the TSX for the day.
