Mongolian lure sparks takeover bid

THE boom in interest in Mongolian resource stocks has borne fruit for shareholders in Hunnu Coal, with an agreed takeover bid only 18 months after it went public.

Thai coalminer Banpu plans to outlay $400 million for Hunnu in a takeover pitched at $1.80 a share, after the company went public at just 20¢ a share in February last year.

Along with holding $36 million in cash to finance its growth ambitions, Hunnu has interests in several prospects in the south and middle Gobi areas, claiming total reserves of 843 million tonnes. Hunnu's shares were only last week added to the ASX 300 Index.
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Hunnu claims to have interests in as many as 15 potential deposits in the country, the largest being the Unst Khudag prospect, which may have 676 million tonnes of coal.

It also has an 85 per cent interest in the Tsant Uul project, which is due to begin production in the final quarter of this year, with output planned to reach 1.5 million tonnes next year, and doubling to 3 million tonnes annually by the year following.

Additionally, it recently bought a 70 per cent interest in the Altai Nuurs coking coal target from Rio Tinto, which it says has an ''exploration target of 250 to 500 million tonnes'', according to a recent investor presentation by the company.

The main constraint to its ambitions are the hostile climate and limited infrastructure, although it does have the advantage of being close to large demand centres in China.

The bid for Hunnu is conditional on the target obtaining all regulatory approvals for its proposed projects in Mongolia, along with 90 per cent acceptances. Hunnu shares closed up 34¢ at $1.72, ending at a slight discount to the indicated offer price.

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