The first job facing PanAust managing director Gary Stafford this morning is to send $25 million to Swiss mining giant Glencore.
Almost 10 months after agreeing to pay Glencore $75 million for its exciting Frieda River Project in Papua New Guinea, PanAust will finally take ownership of the copper and gold deposit today with payment of the first instalment.
Closure of the acquisition ends a long wait for PanAust, which could not be sure of getting its hands on the asset until Glencore successfully sold a separate copper project in South America.
But the wait for Frieda River is not the only reason PanAust has been in limbo this year.
An indicative takeover offer from its major shareholder, Guangdong Rising Assets Management (GRAM), has dragged out into a three month meander, with little indication that a resolution is near.
The takeover bid has delayed the departure of Mr Stafford, whose resignation has been put on hold until the saga is worked through.
Despite appearances, Mr Stafford said talks with GRAM and other parties were still progressing, and he was confident a resolution would be achieved.
“I would hope that during September we will start being able to engage some of those groups and start to listen to what their ideas are as well and hopefully by early October we should have some clarity on this current process,” he said.
“If nothing transpires, well, on Monday we acquire the Frieda River Project and we have plenty of things to be getting on with.”
Now its in his grasp, Mr Stafford is willing to say what he has not been prepared to say previously: Frieda River will be PanAust’s main growth focus, overtaking the stalled Inca de Oro project in Chile.
“I think the market is turning in terms of its appreciation of that project,” he said.
Located in the remote north west of Papua New Guinea, Frieda River was previously the focus of a $US6 billion development plan before being divested by Glencore.
PanAust and its 20 per cent joint venture partner Highlands Pacific want to progress with a development plan that will cost barely a quarter of that, yet still produce similar amounts of copper to OZ Minerals’ Prominent Hill mine in South Australia.
Some believe that GRAM has been waiting for the Frieda transaction to close before pushing through with the takeover.
Others believe GRAM has gone cold, and there are persistent rumours that the group was never particularly warm in the first place.
Mr Stafford acknowledges the process has been lengthy, but says he is not despondent.
“They came in with what we thought was a low-ball offer. The directors said at the time, and it still holds true, it was materially below what we would feel was a level we could recommend to our shareholders. Since then our share price is starting to trade more on fundamentals,” he said.
“They remain engaged, they had a site visit just a short time ago, and other groups are catching them up on their knowledge, so I think we are in a good position.”
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