Higher, all-cash offer emerges for Sierra Rutile
ASX-listed Sierra Rutile on Monday announced a new offer for the company – the third in the last four months – with major shareholder Lenoil throwing its hat in the ring.
Lenoil, which has an interest of 19.85% in Sierra Rutile, has made a cash offer for the company that beats the recent A$0.16-a-share Gemcorp Commodities bid.
“The Lenoil offer is all-cash, has no minimum acceptance, and is 12.5% higher than the Gemcorp offer, and a remarkable 90% higher than PRM Services’ A$0.09-a-share bid announced earlier in March,” said Sierra Rutile chairperson and nonexecutive director Greg Martin.
The board considered the PRM offer opportunistic, having been announced just before the release of the Sembehun definitive feasibility study (DFS) and during a temporary operations suspension.
By early July, the Sierra Rutile board recommended a significantly higher offer from Gemcorp. Now, the Lenoil superior offer has emerged, which the directors have recommended shareholders accept.
“The Lenoil offer better reflects the highly strategic nature of SRX’s existing Area 1 operations and the significance of the Sembehun project, as confirmed by the DFS released in April,” said Martin.
The DFS highlights a range of key outcomes, underscoring the transformative impact of the Sembehun project. It is expected to have a mine life of 14 years and has an ore reserve of 173.7-million tonnes at 1.46% rutile.
A yearly production rate target of about 14.4-million tonnes of ore mined is anticipated, supporting an average of 175 000 t/y of rutile production at steady state.
The expected payback is forecast within 55 months from project commencement, with a post-tax, real net present value, using an 8% discount, of $408-million and an internal rate of return of 27.8%.
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