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Kenmare confirms bid approach from Iluka

Thursday, June 26 11:16:02

Irish-based, Mozambique-focussed miner, Kenmare, this morning confirmed that it has received a bid approach.

Iluka Resources is the world's biggest zircon producer.

Kenmare this morning said its board notes the recent media comment and today's statement from Iluka "and confirms that it has received an approach from Iluka regarding a possible offer by it for the Company's entire issued and to be issued share capital".

"The proposal received was based on a share for share exchange, with no cash component, with Kenmare shareholders receiving 0.036 new Iluka shares for each Kenmare share they own. The board of Kenmare has rejected Iluka's proposal, which it believes does not recognise the value inherent in Moma as a long-life, low-cost asset," the statement said.

Buying Kenmare would give Iluka the smaller company's Moma titanium minerals mine in Mozambique, which produces ilmenite and rutile and contains reserves of zircon. Shares in Dublin-based Kenmare climbed the most in more than five years.

Iluka is seeking to take advantage of depressed markets to secure future growth, Chief Executive Officer David Robb said last month. Rio Tinto Group, the world's second-biggest mining company, this week forecast a return to demand growth for zircon, driven by recovery in China and Western Europe.

"A potential transaction involving Kenmare is consistent with Iluka's strategy of assessing various mineral sands opportunities, Perth-based Iluka said today in a statement. "There is no certainty that any transaction will be progressed or, in particular, that an offer will be made.

Michael Carvill, Kenmare Resources' managing director, declined to comment.

Kenmare climbed 13 percent to 14 pence at 8:58 a.m. in London trading, giving the Irish company a market value of about 376 million pounds ($640 million). It earlier advanced 25 percent, the most since April 2009. The stock dropped 42 percent this year through yesterday.

Kenmare's biggest shareholders include Prudential Plc and BlackRock Inc., who control about 25 percent of the shares combined, according to data compiled by Bloomberg News.

Iluka rose 1.8 percent to A$8.45 in Sydney trading, trimming its decline this year to 2.1 percent, and giving the company a value of A$3.5 billion ($3.3 billion).

Carvill recently had been approached by Iluka with an offer of 20 pence a share, The Times reported today.

Titanium dioxide is mainly used in paint, while zircon is used in ceramic tiles and refractories.