ILU 1.73% $10.59 iluka resources limited


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    Iluka bids $130m for Basin Minerals
    May 29, 2002

    The new boss of Iluka Resources (ILU) has wasted no time in settling in by today launching a $130 million takeover offer for junior mineral sands company Basin Minerals (BMS). Iluka claims the takeover will reinforce its position as the market leader in the global rutile and zircon markets.

    Iluka’s takeover bid follows an unsuccessful offer for the shares in Consolidated Rutile (CRT) it did not already own last year. However, today’s offer appears likely to succeed as it has the unanimous support of the Basin board.

    “The directors of Basin Minerals, who together control approximately 37.8% … intend to accept the offer in relation to shares and options they control and will recommend that all other Basin Minerals shareholders accept the offer.”

    Most of Basin’s tenements are located in the Murray Basin which has been described as one of the most prospective new mineral sands provinces in the world.

    The prize for Iluka is Basin Minerals’ Douglas Project located some 350 kilometres south of Iluka’s own KWR Project. The Douglas Project is centred around high grades of ilmenite, rutile and zircon minerals the production of rutile.

    Iluka believes it can achieve considerable savings from combining the infrastructure needed to develop the projects.

    “Combining Douglas with KWR would deliver direct capital savings of approximately $60 million through the elimination of the need to duplicate key infrastructure [primarily]… through the need for only one minerals separation plant,” said Iluka.

    Under the deal Basin shareholders can accept the offer of $2.10 per share cash, 10 Iluka shares for every 23 Basin shares or a mix of the two. Together with the company’s listed and unlisted options, the offer is worth $130 million.

    “The offer represents a premium of 40% over the closing price of a Basin Minerals share on 28 May … in recognition of the future value of the Douglas Project,” said Iluka.

    SHAW Stockbroking’s head of resources research Mr John Colnan commented: “The acquisition of Basin Minerals will cement Iluka’s position as the dominant Murray Basin mineral sands player with up to 80% of presently-identified resources.”

    “We note that Iluka has the quality portion of these resources with only Bemax Resources (BMX) and Sons of Gwalia (SGW) also owning some tenements in the area.”

    Iluka’s Manging Director Mike Folwell was only appointed to the position on 18 April 2002.

    At the close of trading yesterday, Iluka Resources shares were 6c higher at $4.86 while Basin Minerals was 5c higher at $1.50.

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