Wednesday, September 19, 2012

China displays continued appetite for Australian minerals with Western Desert bid

China's Meijin Energy Group has launched a USD$457 million bid for Australia's Western Desert Resources (ASX:WDR).

"This offer from a major Chinese corporation represents excellent value for shareholders" said Western Desert chairman Rick Allert in a statement.

The bid of AUD$1.08 per share at a 26% premium to Western's last closing price demonstrates that the Asian economic giant still retains considerable appetite for minerals despite recent signs to the contrary.

The Australian branch chief for China's biggest bank announced earlier this week that it would be winding down lending to Australia's resource sector in anticipation of troubled times for miners.

Speculation has also been rife in the Australian media of late that the peak period for the resources sector has passed, triggered by resource minister Martin Ferguson's impromptu announcement of the end of the mining boom in an ABC interview at the end of August.

Western Desert is a diversified miner with interests encompassing iron ore, gold, base metals and uranium. It has 321.1 million outstanding shares and is due to issue a further 19.6 million share as part of a rights offer, which alongside 61.5 million in unlisted options brings total outstanding shares to 402.23 million.

Shenzhen-listed Meijin Energy is based in the inland Chinese coal cradle of Shanxi province, and engages in coal mining, coke production and steel making.

Meijin has already made inroads into the Australia resource industry with a 4.2 billion tonne coal project in Queensland's Galilee basin.