1. Mermaid offshore phosphate deposit in Namibia was bought from Minemakers (same share) for $US25mil; valuing the stock at around 41c a share. Correction: The takeover price values the company at $A32million, which is $6mil over and above the valuation of the Minemakers purchase price.
2. The bid places no value on the company's shareholding in the Iran project; one of the largest undeveloped lead-zinc deposits in the world.
Now, you can wait for a higher offer, but there is the risk that it won't come. This is an unconditional cash offer; so my understanding is that it can be withdrawn after the expiry of the offer. The question for you is not so much the risk of missing out, but the opportunity cost of holding when a higher offer might not come. This is a statistical question because the market has been hit, so it might be more prudent to take this opportunity to take the cash to prepare yourself for the next buy.
The problem as I see it is that the takeover suitor does not necessarily need control of the project. They can creep along and get it slowly at a lower price. Having said that, they might raise it to tidy up lose ends. The question is - is it worth the risk as a shareholder? The last thing you want is to be one of the 10% equity holders holding stock when they move to compulsory acquisition. Now, much depends on how the directors respond to the offer. My problem is that:
1. The directors seem to be saying its a huge premium. That does not give me confidence. Indeed, its kind of misleading if they now come out and say its poor value.
2. I'm wondering if the company executives have a blocking stake of 10% to force a higher shareholding.
I have reluctantly taken the offer because:
1. Its cash and its a good time to re-invest
2. Its a bad market - and the company needs to raise working capital
3. The capital requirements for the company are onerous