Gindalbie and Sundance announce proposed merger

01 October 2007 | 05:33 Code : 15472 Geoscience events
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Iron ore companies Gindalbie Metals Ltd and Sundance Resources Ltd have....

  Iron ore companies Gindalbie Metals Ltd and Sundance Resources Ltd have reached agreement to merge to create a substantial $2.4 billion international iron ore company.The companies have executed a Merger Implementation Agreement (MIA) to effect the merger by way of a Scheme of Arrangement under which Gindalbie will make offers to acquire all of the issued securities in Sundance.The proposed merger will result in the establishment of a major independent Australian-based iron ore company with a diversified asset base comprising world-class iron ore projects in Western Australia and West Africa, a very significant production growth profile and a global presence.Under the terms of the proposed Scheme of Arrangement, Sundance shareholders will receive one Gindalbie share for every two Sundance shares they hold. Based on the closing price of Gindalbie shares on 21 September 2007 of $1.70, the offer values Sundance at approximately $1.6 billion and represents a premium of 14.9% on the closing price of Sundance shares on 21 September 2007 of 74 cents, and a 34.5% premium to the 30-day volume weighted average price (VWAP) of Sundance shares.On completion of the merger, the new entity would have approximately 1.43 billion shares on issue with an estimated market capitalization of approximately $2.4 billion based on the closing price of Gindalbie shares on 21 September of $1.70. Gindalbie security holders would hold approximately 35% and Sundance security holders approximately 65% of the merged company.Mr George Jones, who is the Chairman and a shareholder of both Gindalbie and Sundance, has expressed his full support for the transaction. Commenting on the merger proposal, Mr Jones said: "The proposed merger provides both groups of security holders with the opportunity to participate in the creation of a new international mining house with a pipeline of world class projects.”The merged entity expects to become a substantial iron ore developer/producer on a world-scale, with a potential combined production level of more than 60 Mtpa of hematite, magnetite concentrate and blast furnace quality pellets by the middle of the next decade.

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