Australia's Summit backs billion dollar takeover

16th April 2007, Comments 0 comments

SYDNEY, April 16, 2007 (AFP) - Australian exploration company Summit Resources Monday recommended that shareholders accept a revised billion US dollar takeover offer from uranium miner Paladin Resources.

SYDNEY, April 16, 2007 (AFP) - Australian exploration company Summit Resources Monday recommended that shareholders accept a revised billion US dollar takeover offer from uranium miner Paladin Resources.

Summit last month advised shareholders to reject Paladin's initial 790 million US dollar scrip offer from Paladin and formed a strategic alliance with French nuclear group Areva to block the takeover.

Paladin then submitted an increased offer of one Paladin share for every 1.67 Summit shares, valuing the company at 6.22 Australian dollars per share or 1.23 billion (1.01 billion US).

Summit chief executive Allan Eggers said the board undertook a detailed analysis of the potential future risks and rewards for Summit shareholders of staying independent compared to the benefits of being part of a much bigger company with existing production and growth prospects.

He said this included Paladin's offer enabling Summit shareholders to retain exposure to the Mount Isa Uranium Project (IUJV) through ownership of Paladin shares.

Summit is the manager and holder of a 50 percent interest in the IUJV, with Paladin holding the other 50 percent interest which was under contention.

"I remain convinced that the Mount Isa project will prove to be world class and that it will produce not one, but several, world class metal deposits," Eggers said.

He noted the board also considered the shorter term risk that there might not be a change to the Australian Labor Party's policy which restricts uranium mining. Labor heads all state governments.

Only BHP Billiton's Olympic Dam project in South Australia and Rio Tinto's listed uranium miner, Energy Resources of Australia Ltd's Ranger mine in Australia's Northern Territory are currently commercially operational.

Eggers noted the board previously concluded that the benefits of the Areva transaction outweighed the benefits of accepting Paladin's first offer.

Areva planned to purchase 19.5 million Summit shares at 6.20 dollars per share, representing a 9.0 percent shareholding and a cash injection of 121.1 million dollars into the Australian company.

It would have had an option of increasing its stake in Summit to 18 percent at a price of 7.20 dollars per share and a further 171.5 million dollars.

In conjunction with the second share subscription, Areva was to be appointed to market two-thirds of Summit's share of potential uranium production from its Australian projects, with Summit retaining the right to market the remaining production.

"The Board now believes that the benefits of accepting Paladin's higher offer when combined with the risks of rejecting it support our recommendation that you accept Paladin's higher offer," Eggers said.


Copyright AFP

Subject: French news

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