The board of Riversdale Mining Ltd, including the representative from Tata Steel Ltd (TSL), has unanimously recommended that Riversdale shareholders accept the offer by Rio Tinto to purchase all Riversdale shares for $16.00 cash/share. TSL’s representative, N.K. Misra, had originally abstained from voting on the offer when it was announced last month.
However, according to Riversdale, Misra’s recommendation of the offer was made in his capacity as board member and does not reflect TSL’s position. TSL, through its subsidiary, TS Global Minerals, is the largest shareholder in Riversdale and has reserved all its rights in relations to its shareholding and any response to the offer.
According to the company announcement, the directors recommend the offer, as it “provides an attractive alternative to holding their Riversdale shares until the major assets of Riversdale – the Benga project and the Zambeze project, both of which are located in Mozambique – come into full production ."
"Taking these projects from their present preproduction status into full production will take a number of years; it will involve very material capital expenditure; and it will be subject to significant risks and uncertainties.”
The directors also believe that, in the absence of the offer, a superior proposal or speculation that a superior proposal may be made, the market price for Riversdale shares is likely to fall below the offer price. As yet, no superior proposal has been received by Riversdale and the company is not aware of any party having an intention to make such a proposal.
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