Exxaro launches $349m bid for African Iron

Johannesburg - Exxaro Resources [JSE:EXX] made a bid worth up to A$338m ($349m) on Wednesday for African Iron, chasing the Australian-listed company’s Mayoko iron ore project in the Republic of Congo.

The offer of up to A$0.57 a share sent African Iron’s shares up 35% to A$0.54, indicating investors expect the deal to go through.

Exxaro has lined up a 19.99% stake from African Iron’s top shareholder, Cape Lambert Resources, which owns a further 5.26% stake.

Key to the outcome will be African Iron’s other big shareholder, Equatorial Resources, which owns the neighbouring Mayoko-Moussondji project.

Equatorial, which bought a 19.99% stake in African Iron last year at A$0.30, did not say on Wednesday whether it would accept the offer, but said it welcomes Exxaro’s interest in Equinox.

"Exxaro’s announced takeover offer for African Iron confirms the significant exploration and development potential of iron projects in the Mayoko region and highlights the advantages of the investment friendly jurisdiction of the ROC," Equatorial said in a statement to the Australian stock exchange.

Exxaro has already received the nod from Australia’s Foreign Investment Review Board, as well as South African approvals.

Cape Lambert’s shares rose 1.9% to A$0.535 and Equatorial’s shares rose 4.2% to A$2.00, outpacing a 1% gain in the broader market.

Exxaro is being advised by Investec and law firm Gilbert+Tobin. African Iron’s legal adviser is Freehills.