Bannerman receives buy-out offer

THE BOURSE WHISPERER: Perth-based Bannerman Resources has received a highly conditional proposal from Hanlong Mining Investment.

Hanlong is a subsidiary of Chinese conglomerate Sichuan Hanlong Group.

The received proposal from Hanlong is for the acquisition of 100% of Bannerman for 61.2 cents cash per Bannerman share by way of a scheme of arrangement.

Bannerman said its board is of the opinion that Hanlong recognises a strategic significance in controlling its large-scale and low technical risk Etango uranium project in Namibia.

Bannerman is also convinced Hanlong’s approach has been timed to take advantage of its low share price which has been adversely affected by such issues such as the events at Fukushima and weak global equity markets.

“It is understandable that Bannerman is now attracting corporate interest,” Bannerman Resources chairman David Smith said in the company’s ASX announcement.

“Bannerman controls one of the largest undeveloped uranium resources in the world and, despite recent events, there is no doubt that nuclear power will continue to play a key role in meeting the world’s growing energy needs as well as alleviating greenhouse gas emissions.

“Etango is a strategic asset which is highly leveraged to a stronger uranium price in a world where security of supply is one of the most important issues for nuclear power generators and utilities.”

It is no secret to the market that Bannerman has been seeking to identify a suitable joint venture partner to facilitate the financing, development and operation of the Etango project.

As part of this process, Bannerman has been in discussions with a number of large and well-funded parties.

As part of its proposal, Hanlong is seeking a three month period of exclusivity; however, Bannerman has resolved it is not appropriate to grant Hanlong exclusivity given the absence of agreement on price and the conditionality of the proposal.

As well as holding discussions with Hanlong in relation to its proposal, Bannerman said it intends to continue to advance joint venture discussions with third parties in order to explore all options.

The Hanlong proposal is subject to a range of conditions including:

– Completion of due diligence by Hanlong to its satisfaction on or before 30 September 2011;

– Receipt of Chinese approvals (including from the State Administration of Foreign Exchange, the National Development Reform Commission and the Ministry of Commerce);

– A Bannerman Board recommendation (a necessary pre-requisite given Hanlong’s proposal assumes a Bannerman scheme of arrangement under Australian law);

– Obtaining support from major shareholders;

– Continuity of Bannerman senior management;

– Approvals by related stock exchanges (if required);

– Foreign Investment Review Board approval in Australia and approvals by any other governments/jurisdictions (if required);

– No material adverse change or other prescribed occurrences;

– No material transactions, claims, new commitments or changes;

– Absence of regulatory intervention;

– No third party consents required; and

– Negotiation of transaction documentation.

Bannerman said there can be no certainty that the Hanlong proposal will proceed and it is possible that a final position will not be known for some months.