CZR Resources receives $75m offer for Robe Mesa project as bidding war intensifies
CZR Resources (ASX: CZR) has received a conditional $75 million proposal from three major international iron ore companies for its Robe Mesa project in Western Australia.
The unsolicited proposal has been lodged by the Robe River JV, made up of Rio Tinto (ASX: RIO) (53%), Mitsui & Co (33%) and Nippon Steel Corporation (14%).
If the offer is completed, CZR would retain its interests in other projects such as the Croydon gold project, the Buddadoo project and its 50% interest in the Ashburton Link project.
Bidding war underway
The bid for Robe Mesa comes a day after CZR received an unsolicited proposal from Gold Valley Iron Ore to acquire all CZR shares via an on-market takeover bid.
On the same day, Fenix Resources (ASX: FEX) announced it had received acceptances from shareholders for 10.04% of all CZR shares in response to the conditional off-market takeover bid it had launched for the company in February.
The CZR board has so far determined that the Gold Valley proposal does not constitute a superior offer compared to the binding offer from Fenix.
Fenix offer favoured
The CZR board continues to recommend the Fenix offer, with directors unanimously in favour of the proposal in the absence of a superior one.
The Robe Mesa deposit is CZR’s cornerstone project with ore reserves of 33.4 million tonnes at 55.0% iron and a resource base of 45.2Mt at 56% iron.
The project’s low strip ratio provides a low-capex direct shipping ore opportunity with a rapid, low-cost path to production.
Debt funding consideration
As part of its efforts to obtain the support of major shareholders, the Robe River JV would consider providing CZR with an equivalent amount of debt funding to that offered under the working capital loan provided by Fenix, along with a further amount equal to the break fee under the bid implementation agreement between CZR and Fenix Resources.
After consultation with its external legal advisers, the CZR board has determined that the Robe River approach is a potential competing offer that could reasonably be expected to lead to a superior proposal.
As such, the CZR board intends to engage with Robe River JV in relation to its proposal.