Recommended cash offer for Herald Resources from Antam and Zhongjin

PT Antam Tbk and Shenzhen Zhongjin Lingnan Nonfemet Co have offered A$2.50 per share for the entire issued capital of Herald Resources, valuing it at A$504.8 million ($448.1 million). Antam is a state-controlled Indonesian mining group that already holds a 20% interest in Herald’s 80%-owned Dairi zinc/lead project in Northern Sumatra, Indonesia. Zhongjin is a zinc/lead mining and smelting company based in China and operates the low cost Fankou mine.
The Board of Herald Resources withdraws its previous recommendation to accept the lower offer of A$2.25/share of Calipso Investment and unanimously recommends that Herald Resources shareholders accept the Antam/Zhongjin Offer in the absence of a superior proposal. The Directors have also indicated that in the absence of a superior proposal they currently intend to accept the Antam / Zhongjin Offer for their own holdings of Herald Resources shares.

The President Director of Antam, Dedi Aditya Sumanagara, said: “The joint acquisition of Herald Resources represents an opportunity for Antam to have a majority interest in the Dairi Project and build a strategic partnership with one of China’s leading zinc and lead companies. In view of the recently launched offer for Herald Resources, we believe that the value of the Dairi project can be best optimised by the expertise of Antam and the introduction of an operating partner, such as Zhongjin, which has demonstrated expertise in zinc and lead mining and the capacity to enter into long-term production off-take arrangements. These factors have enabled us to offer an amount in excess of the valuation range of A$2.03 – A$2.39 per share derived by PT Zodiac Perintis Penilai, the independent valuer commissioned by Calipso’s parent, PT BUMI Resources.”

The President of Zhongjin, Zhang Shuijian, said: “We believe that Zhongjin and Antam have the potential to add significantly to the current value of the Dairi Project. Zhongjin looks forward to working alongside Antam in developing the Dairi Project and building a long and prosperous relationship”.

The Chairman of Herald Resources, Terrence Allen commented that: “We believe that the Antam/Zhongjin Offer represents an excellent outcome for Herald’s shareholders and we will be working with Antam and Zhongjin to ensure that this offer is put to shareholders as expediently as possible”.

Herald has been listed on the ASX for nearly 60 years. Initially mining and processing industrial clays, under the present management the company diversified in the mid-1980s into gold exploration. With its first mine in production in 1986, Herald has developed a new mine every four years on average since that time. Its primary focus is currently on the high-grade Dairi zinc/lead project, where a positive feasibility study has been completed and construction is expected to commence in 2007 following forestry approval.