Glencore to take Katanga Mining private

Glencore International (GIAG) will take Katanga private by way of an amalgamation of the company with 836074 Yukon.

Shareholders, other than GIAG, will receive C$0.16 in cash for each pre-amalgamation common share held, which Katanga said represented a 100% premium to the closing price of the common shares on April 21, a 139% premium over the 20-day volume-weighted average price and a 60% premium to the high-end of a valuation range provided by KPMG.

Katanga said a special committee of the board, which retained CIBC World Markets and KPMG as advisers, determined “unanimously” that the amalgamation was in the best interests of the corporation and that it was fair to shareholders. The committee has recommended that the board approve the amalgamation and that shareholders vote in favour of the transaction.

Katanga cited a lack of a meaningful public float and limited trading liquidity, the costs of a stock exchange listing, the premium being offered to shareholders, the current commodity price risks, the ongoing operational risks, the financial risks and the lack of sources of financing without support from GIAG as the reasons for the going-private transaction.

GIAG intends to vote all of its 60 870 439 243 common shares, representing about 99.5% of the issued and outstanding common shares, in favour of the amalgamation.

Meanwhile, Katanga reported that there had been no material disruptions to its productive operations during the first quarter, as a result of the Covid-19 pandemic, but cautioned that there could be no certainty that restrictive measures implemented by the DRC would not impact on its operations in the coming weeks and months.

“The company will likely be materially and adversely impacted if its operations are disrupted for any extended period of time, or if it is unable to either import required supplies or export finished product. Further, the lack of extensive health infrastructure in the DRC may materially and adversely impact the company.”

Travel restrictions as a result of Covid-19 are impacting on Katanga’s projects. The company has delayed the commissioning of its acid plant at the Kamoto Copper Company (KCC) with commissioning expected in the second half of the year, rather than the first half.

In the first quarter, Katanga increased its copper cathode production to 67 298 t, from 65 402 t in the fourth quarter. Cobalt contained in hydroxide decreased from 6 174 t in the fourth quarter, to 5 296 t in the quarter under review.

The company’s guidance for 2020 is to produce 270 000 t of copper and 26 000 t of cobalt this year.