South African miner Exxaro has made a takeover bid for Australian miner Territory Resources for A$123 million in cash.
Territory has an iron ore operation in Australia’s Northern Territory, with an operating mine at Frances Creek positioned close to rail and port infrastructure serving the port of Darwin. The mine produces approximately 1.6 million tonnes per annum of lump and fine direct shipping ore.
Territory also owns rights to iron ore tenements in the vicinity of Frances Creek.
Exxaro has made no secret of its strategy to expand into the iron ore sector. The company, which already has in-house expertise and experience in mining bulk ore commodities, said it believes the fundamentals of iron ore are positive in the medium to long term.
Exxaro has therefore been actively seeking opportunities to increase its exposure in iron ore. It said it believed that this operation in Australia—a region in which it already has considerable operational experience—would provide a good basis for further growth in iron ore.
Commenting on the deal, Sipho Nkosi, Exxaro’s CEO, said: “Territory’s assets provide an excellent match to Exxaro’s stated objective of gaining operational exposure in iron ore. Territory represents a reasonably sized opportunity, which will allow Exxaro to leverage its bulk commodity and iron ore beneficiation expertise.
“At the same time the offer allows Territory shareholders the opportunity to realise an attractive cash price at a considerable premium to the market value.”
Headquartered in Pretoria, Exxaro has interests in coal, mineral sands, base metals and industrial minerals, with exposure to iron ore through a 20 per cent interest in Sishen Iron Ore Company. The company is South Africa’s second-largest coal producer with a capacity of 45 million tonnes per annum, and its third-largest global producer of mineral sands.
