Bloomberg News

Anvil Says Gecamines Review Puts Minmetals Deal at Risk

November 01, 2011

(Updates to add company comment in third paragraph.)

Oct. 31 (Bloomberg) -- Anvil Mining Ltd., which produces copper in Africa, said an agreed HK$10 billion ($1.3 billion) takeover deal with Minmetals Resources Ltd. may not be completed if talks with state-owned partner Gecamines don’t progress.

Gecamines, the Democratic Republic of Congo’s copper miner, is seeking a review of the financial terms of a lease agreement for Anvil’s Kinsevere project and a review of the joint venture agreement for the Mutoshi project before allowing the C$8 ($8.05) a share takeover from China’s Minmetals to proceed, Perth-based Anvil said today in a statement.

Anvil and its advisers will continue talks with Gecamines and Minmetals, the company said. “In the absence of a solution which does not result in any material amendments to the contractual agreements with Gecamines, there is a risk that” the takeover may not be completed, it said.

Anvil, which has risen 25 percent since the Sept. 30 offer, fell 1.2 percent to A$7.26 in Sydney trading.

Last year, Congo completed a three-year review of more than 60 mining partnerships that resulted in the renegotiation and cancellation of contracts with companies including Canada’s First Quantum Minerals Ltd. Gecamines on Oct. 6 proposed a reorganization to return the company to profit through increased production, job cuts and audits of its joint-venture contracts.

Legal Requirement

Anvil owns 95 percent of the Kinsevere project through a Congolese unit, which in turn holds a minerals lease from Gecamines. Anvil owns 70 percent of Mutoshi through a local subsidiary, with the remainder held by Gecamines.

“Anvil’s position is that there is no legal requirement for Gecamines’ approval in connection with the proposed change of control under any of its contractual documentation and that no legal right to renegotiate the contractual arrangements arises on the completion of the change of control,” Anvil said.

Gécamines made a statement in early October that it intends to audit compliance by all of its joint venture partners with their contractual commitments to Gécamines, Anvil said. During the consultations with Gécamines, it advised Anvil and Minmetals that it believes that the Anvil group is not in compliance with its obligations in respect of the Mutoshi Project, the company said.

--Editors: Keith Gosman, Andrew Hobbs

To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

To contact the editors responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net;


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