Cathay Fortune Corporation Chairman, Yong Yu, offered a P6.5 Billion bid to take over Discovery Metals, after the directors described the P13.7 a share offer as insufficient. After being rejected by the directors, the Chinese billionaire approached the shareholders proposing to purchase all their shares in October. The directors also advised the shareholders to reject the offer. Cathay Fortune Investment is 75 percent owned by CFC and 25 percent owned by CAD Fund. CFC already owns a 13.7 percent stake in Discovery Metals. The company has set a minimum acceptance condition of 51 percent, which means it needs just over 37 percent support to go ahead with the deal. In a statement released, CFIL says that their offer is pitched at a 40 percent premium above Discovery's recent fundraising exercise.
Towards the end of November, the mine encountered a localised failure of a section of an interim hanging wall, which occurred while a pit was being dug. Subsequent to the failure, the Department of Mines requested that Discovery Metals temporarily suspend deepening of the Zeta Open Pit. Geotechnical investigations into the cause of the failure have been conducted and discussions with the Department of Mines are on-going. In a letter to the shareholders, CFIL states that because Discovery Metals did not give detailed information on the matter, so the investigation period allows the shareholders to consider selling their shares.
It reads: "We are surprised by the lack of detail provided by Discovery. CF Investment's initial view is that this could breach the "no material adverse effect" condition in paragraph 10(h) of the Bidder's Statement. The fact that this announcement was made by Discovery indicates that it is a matter material to Discovery Shareholders in deciding whether to sell their shares." Should the deal go through CFIL will own 75 percent of Discovery Metals, with the remainder owned by China-Africa Development Fund.