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February 15, 2008 |
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ZINIFEX: May Back Out from Allegiance Bid If Losses Continues Zinifex Limited has warned it may drop its AU$745 million offer for Allegiance Mining NL on account of its recently disclosed speculative share trading loss of US$7.9 million, published news report. The Sydney Morning Herald says that Allegiance's December quarter report disclosed that US$2.44 million was lost from the disposal of trading investments, with a further US$5.44 million lost because of a decline in world markets. Allegiance's disclosure caused Zinifex to demand a full disclosure from the company that it offers to buy in an all- cash, but hostile, transaction for AU$1 per share. Although Zinifex has already secured about 5% share in Allegiance, it has yet to convince its major shareholder, Jinchuan Group Limited, to accept its offer. According to Comtex, Jinchuan, which holds a 10.4% stake in Allegiance, is opposed to the proposal. The major shareholder had written to other holders stating its opposition against the deal. Zinifex has said in its statement that it could turn its attention to other companies if Allegiance fails to provide the full disclosure it wants. According to Egoli, Zinifex has signed an agreement with Trafford Resources Limited to explore and produce lead, zinc, and silver in South Australia. About Allegiance Mining Allegiance Mining is an Australian nickel mining company that is about to commission its first nickel project located in Tasmania. Its Avebury nickel project is due to start production in 1Q-08 and the company has an on-going exploration effort targeting nickel sulphide deposits. About Zinifex Ltd. Zinifex Limited, one of the world's largest integrated zinc and lead companies -- http://www.zinifex.com/ -- is headquartered in Melbourne, Australia. The company owns and operates two mines and four smelters. The mines and two of the smelters are located in Australia and supply the growing industrial markets of the Asian-Pacific region, including China. The company also has a zinc smelter in the Netherlands and the United States. The company sells a range of zinc metal, lead metal, and associated alloys in 20 countries. More than 80% of the company's products are distributed outside Australia, particularly in Asia, which is experiencing significant growth in construction activity and vehicle production. Zinc is used for steel galvanizing and die-casting and lead for lead acid batteries used mainly in cars and other vehicles. * * * The Troubled Company Reporter-Asia Pacific reported on Dec. 18, 2007, that Fitch Ratings affirmed Zinifex Limited's 'BB+' long-term foreign currency Issuer Default Rating (IDR), following the announcement of an all cash offer for Allegiance Mining NL (Allegiance). Fitch said the outlook is stable. |
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