August 29, 2008

Perilya bids AUD 294 million for CBH Resources

It is reported that Australia's Perilya Limited bids AUD 294 million for fellow zinc miner CBH Resources Limited, aiming to unite their ageing mines as they try to diversify to counter a sagging zinc price.

The miners said in a joint statement that the friendly deal, which was flagged a month ago when the pair revealed they were in talks, would lead to major efficiencies at their operations in the Broken Hill region of eastern Australia. The two miners said that the new company would have an equity market value of about AUD 491 million, making it one of Australia's top 40 listed miners. Under the terms of the deal, Perilya would offer 1 of its shares for every 3 CBH shares and one Perilya option for every 20 CBH options.

Mr Patrick O'Connor chairman of Perilya said that "The combination of the two companies is a logical development that will create a new force in global lead and zinc markets."

The tie up comes as Perilya and CBH take steps to diversify away from ageing zinc mines by adding other commodities to their activities, and amid forecasts for declining zinc prices with a large surplus expected in the market this year.

Perilya is looking to develop a new copper mine in eastern Australia while CBH Australia wants to dig a copper and zinc mine in Western Australia. They said that the deal had the support of Japan's Toho Zinc Co Limited, which has a 25% stake in CBH.