Reuters – Cathay Fortune Proposes New Bid for Discovery Metals

Chinese firm Cathay Fortune Corp, the top shareholder and a former suitor of Australia’s Discovery Metals Ltd, has proposed a fresh offer to buy the copper miner as long as Discovery halts a planned equity raising, writes Reuters. The private equity firm founded by Chinese billionaire Yu Yong is targeting Discovery for its Boseto project in Botswana, which is within the Kalahari copper belt region that has attracted billions of dollars in takeovers in the past two years.

Reuters – Chinese firm Cathay Fortune Corp, the top shareholder and a former suitor of Australia’s Discovery Metals Ltd, has proposed a fresh offer to buy the copper miner as long as Discovery halts a planned equity raising.

The private equity firm founded by Chinese billionaire Yu Yong is targeting Discovery for its Boseto project in Botswana, which is within the Kalahari copper belt region that has attracted billions of dollars in takeovers in the past two years.

The Chinese firm said the Brisbane-based miner was at risk of going into receivership and expressed deep misgivings about the competence of Discovery’s board.

“CFC is willing to put a binding cash proposal to the Board to acquire Discovery subject to the proposed equity raising not proceeding,” Cathay Fortune said in a letter to shareholders on Wednesday.

A Cathay Fortune spokesman said the firm was not in a position to put a price on the offer before it had completed its due diligence.

“The reason is that Cathay has lost confidence in the board and their public disclosures, and wants to do a short period of due diligence ahead of putting a more formal proposal to the company,” he said.

Cathay Fortune said they believed Discovery’s current financing plan was a “serious mistake”.

“We are of the opinion that if Discovery progresses with the current financing arrangements, it is likely that it may be forced into receivership in the near future,” the firm said.

Instead, Cathay Fortune asked the Discovery board to allow bidders including itself to conduct due diligence “in no more than 10 days” and put a binding cash proposal on the table.

Discovery Metals’ representatives were not immediately available to comment.

The miner’s shares have not been traded since the company requested a halt on Friday. They last traded at 34 cents, one-fifth of the A$1.70 that Cathay Fortune and its partner had originally offered.

Cathay Fortune scrapped a joint A$824 million ($849 million) bid for Discovery Metals in February over concerns about the target’s Botswana copper project, but it remains Discovery’s top shareholder with a 13.7 percent stake, according to Thomson Reuters data.

(Reporting by Maggie Lu Yueyang; Editing by Stephen Coates)