Zinifex wins control of Allegiance Mining

Zinifex wins control of Allegiance Mining

ZINIFEX Ltd has prevailed with its $790 million, three-month takeover battle for Allegiance Mining NL, announcing it has gained control of the nickel miner.

Lead and zinc miner Zinifex, which was born from the ashes of the failed Pasminco Ltd, said it had increased its stake in Allegiance to 51.1 per cent from 44.78 per cent previously.

Zinifex is to further diversify its production base through its proposed merger with gold and copper producer Oxiana Ltd, announced on March 3.

However, Zinifex is unlikely to hold 100 per cent of Allegiance for the time being as the target’s largest shareholder, China’s Jinchuan Group Ltd, said last fortnight that it planned to hold on to its 10.4 per cent stake.

Jinchuan is sitting tight, waiting to see how the Zinifex-Oxiana merger develops.

Allegiance chairman Tony Howland-Rose said Jinchuan may want to become a minority shareholder in a merged Oxiana and Zinifex – a $12 billion company – to gain exposure to their combined lead, zinc, gold and copper assets.

Jinchuan, the largest nickel producer in Asia and the second largest copper producer in China, has off-take agreements for all nickel produced by Allegiance assets.

The Allegiance takeover has at-times been an acrimonious affair that includes mud slinging by both sides and a Takeovers Panel intervention.

Zinifex launched its initial $775 million bid for Allegiance in December.

The mid-tier miner rebuffed the then 90 cents per share offer, saying the bid was too low.

Allegiance said at the time that the offer was opportunistic because it was on the verge of starting commercial nickel production at its flagship Avebury nickel mine in Tasmania after more than a decade of exploring and developing the project.

The target said the offer undervalued the prospectivity of surrounding land, which has so far yielded encouraging drill results.

Zinifex gained the support of the Allegiance board when it raised its bid to $1 per share on January 24, valuing the target at $790 million.

The predator extended the offer period twice due to slow acceptances by Allegiance shareholders.

By February 8, Zinifex had accrued just 0.26 per cent of its target.

However, momentum gathered after Allegiance’s largest institutional shareholder, Lion Selection Group Ltd, accepted the revised offer and pocketed proceeds of $48.5 million.

Allegiance was among the most traded stocks today, just over 1 million shares changing hands worth $34 million at 1448 AEDT.

Shares in Allegiance were steady at $1.110 at 1448 AEDT, while Zinifex’s shares were down 34 cents to $9.56.


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