BCL takeover must include its debt - Tombale

GORDON KEMBELY
Correspondent | Wednesday March 28, 2007 00:00

 

Tombale was responding to Bloomberg reports that Xstrata, the world's fourth largest nickel producer, was planning a friendly take-over of LionOre Mining International for $4billion (approx. P28.8billion). Sources say the bid only awaits shareholders' approval.

LionOre, together with the Government of Botswana, owns BCL Mine in Selebi-Phikwe and Tati Nickel Mine in Francistown.  LionOre through BRST (formerly Roan Selection Trust), has a 25 percent shareholding of BCL, against the Government of Botswana's 35 percent; both own their respective shares through BRST (formerly Roan Selection Trust).

At Tati Nickel, however, LionOre has a controlling shareholding of 85 percent, against Government's 15 percent. Tombale said in an interview yesterday that Government was aware of the planned acquisition and that they would not have any problem with it. 'As Government, we have shares in mines operated by LionOre - BCL in Selebi-Phikwe and Tati Nickel near Francistown.

'We are aware that there is a possible acquisition that still has to be approved by shareholders. But in principle, we do not have any problem with the acquisition,' he said.
However, Tombale said that any take-over of BCL would have to include the company's debts - said to run to billions of Pula - owed to creditors.

'As regards BCL, the acquisition does not change anything. Debt is still owed to government and whoever comes in will have to buy as it is. They will need to deal with the issue of what is owed to the Government of Botswana,' he said.

Tombale said that BCL owed three major creditors, namely the government of Botswana, and banks KFW and IDC.

'It should be noted that the government of Botswana, which is owed about P11 billion is the major creditor and the debt will have to be paid before BCL can start paying other creditors,' he said. Other than Botswana, the company also has operations in South Africa where it owns Nkomati; and in Western Australia where it owns a gold mine named Thunderbox. 

Tati Nickel Mine, which lies some 30 kilometres east of Francistown, constitutes LionOre's major operation in Botswana.

Tati Nickel comprises the Phoenix open pit nickel mine, a 5mtpa (metric tonnes per annum) concentrator, a 1.7mtpa Dense Media Seperation (DMS) Phase I plant, an Activox (under contruction) Phase 1 plant and the Selkirk underground mine.

The mine has approximately 2,000 permanent employees and contractors.
Meanwhile, LionOre's worldwide nickel production is supported by significant by-product credits in the form of copper, cobalt, gold and the platinum group metals.

A media release by LionOre says that the acquisition bid by Xstrata follows recommendations by LionOre's board of directors.

'The Board of Directors of LionOre, after consultations with its financial and legal advisors ... recommends that LionOre shareholders tender to the offer,' says the statement. It further says that LionOre financial advisors, JP Morgan, hold the opinion that the offer is fair to shareholders, from a financial point of view.

LionOre is listed on the Toronto (LIM) (where it has its primary shareholding), London (LOR), Australia (LIM) and Botswana (LIONORE) stock exchanges where stock, buoyed by a five-year rally in metals, has been rising consistently.