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Peak Rare Earths board endorses takeover proposal from major shareholder Shenghe Resources

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By Colin Hay - 
Peak Rare Earths ASX PEK proposed takeover Shenghe Resources
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The board of Peak Rare Earths (ASX: PEK) has given its support to a proposed takeover of the company by China’s Shenghe Resources.

A partly state-owned Chinese rare earths mining and processing company, Shenghe has proposed to acquire 100% of Peak by way of a scheme of arrangement.

Shenghe is Peak’s major shareholder and owns the binding offtake rights to all of the rare earths production from the company’s Ngualla rare earth project in Tanzania.

Superior outcome

In announcing its support, the Peak board told shareholders it believed that the scheme delivers a superior outcome compared to a previous Ngualla Group UK (NGUK) transaction.

The board noted that the new scheme had the potential to provide a significantly higher value outcome for Peak shareholders on a risk-weighted basis, placing an implied value of $150.5 million for Peak’s interest in the Ngualla project compared to $96m under the NGUK transaction.

The board also suggested Peak shareholders would have the opportunity to realise an attractive price for their shares and avoid potential risks around the development, operation and funding of the Ngualla project.

“The proposed scheme offer price of a minimum of approximately $0.359 represents an excellent outcome for shareholders and a 199% premium to Peak’s closing share price prior to the announcement,” Peak chief executive officer Bardin Davis said.

Careful evaluation

Peak chair Russell Scrimshaw said that, having carefully evaluated the NGUK transaction and other alternative options to develop and fund the Ngualla project, the Peak board believes the proposed scheme delivers the best outcome currently available to shareholders on a risk-weighted basis.

“We are also mindful of the importance to Tanzania of developing the Ngualla project and believe that Shenghe is well positioned to partner with the government of Tanzania to successfully develop this world-class project.”

Under the scheme, Shenghe subsidiary Ganzhou Chenguang Rare Earths New Material has also agreed to pay an amount equal to the funds to be raised under the proposed entitlement offer the company will be conducting over May and June of 2025.