Australian mineral sands miner Iluka Resources has confirmed it is moving towards a takeover of Kenmare Resources.
Yesterday Iluka said it had made an offer to the Irish sand miner, and that further announcements will be made if and when appropriate.
“There is no certainty that any transaction will be progressed,” Iluka said.
Iluka has been coy about the nature of the offer, describing the proposal as a combination of the companies.
Kenmare revealed the nature of the offer was for Kenmare’s entire issued and to be issued share capital.
Iluka proposed to exchange with Kenmare shareholders 0.036 new Iluka shares for every Kenmare share.
The board of Kenmare said they rejected the proposal, as it did not recognise the long-life, low-cost value of the Moma titanium minerals mine, their flagship operation located on the north-east coast of Mozambique.
Fund manager and 19.05 per cent owner of Kenmare, M&G Investment Management, has supported the board’s decision.
Kenmare warned its shareholders to sit tight before making any decisions based on the offer.
“Kenmare shareholders will be kept informed of relevant developments and in the meantime are advised to take no action,” they said.
“The approach from Iluka was preliminary in nature and was subject to various preconditions, including due diligence.”
Kenmare shares have leapt in conjunction with the offer, closing trade at 11.85 pounds sterling on the London Exchange on Wednesday night, and kicking off at 13.22, presently sitting at 15.
The Moma operation mines sand resources by dredging, which include ilmenite and rutile for producing titanium dioxide pigment, as well as the higher value zircon mineral.
Moma is capable of producing 800,000 tonnes of ilmenite each year, plus 50,000 tonnes of co-product zircon and 14,000 tonnes of co-product rutile.
Kenmare is planning an expansion ramp-up, which will increase capacity from 800,000 tonnes to 1.2 million tonnes of ilmenite plus associated co-products per annum.