Consortium raises offer for Kaz Minerals to £4.1bn

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The consortium bidding to take Kaz Minerals private has made a final offer for the London-listed copper miner as it seeks to win over minority shareholders.

Nova Resources, which is controlled by Kaz chair Oleg Novachuk and billionaire metals tycoon Vladimir Kim, said it would pay 850p a share for the 61 per cent of the company it does not already own.

That is up from a previous bid of 780p a share made in February. A first offer in October was pitched at 640p a share. 

Shareholders will also be entitled to a special dividend, paid in US dollars, of 27 cents a share, giving the final offer an aggregate value of 869p, or £4.1bn.

Commenting on the raised offer Novachuk said Nova has listened to “market constituents” and the final offer fully reflected the change in “copper market dynamics” since its original bid. “We remain convinced that the final increased offer represents a highly attractive return for Kaz Minerals Shareholders,” he said.

To delist the Kazakh-focused copper producer, Nova needs to win approval from 75 per cent of shareholders. Including the shares it owns, the investment vehicle already has acceptances from nearly 60 per cent of shareholders. The offer will remain open until April 9.

It has also received non-binding letters of intent from two hedge funds — Samson Rock Capital and Alpine Associates Management — to accept the offer. Together they own 3.17 per cent of the company.

However, it is not clear if the improved bid will be any more palatable to other minority shareholders. RWC Partners, which owns 3.1 per cent of the company, has said a bid of £10 a share would be more acceptable.

The decision to pay a special dividend could also be a source of tension as Kaz decided not to declare a final dividend for 2020 when it reported annual results last month.

Since Nova’s first bid in October, copper has been on a tear and recently rose to a 10-year high of almost $9,500 a tonne. The metal, used in electric vehicles and wind turbines, will play a crucial role in the battle against climate change.

Analysts expect demand to rocket over the next decade, meaning many more new mines will be needed to avoid a supply crunch.

This includes projects such as Baimskaya, a huge ore body in a remote part of Russia, that Kaz is looking to develop. Baimskaya is regarded by some investors as one of the mining industry’s most exciting under-developed copper prospects even though its estimated capital expenditure has increased to roughly $8bn. 

“Kaz Minerals must now focus on the execution of a higher risk, capital intensive strategy to deliver the Baimskaya project, the associated implementation risks of which are substantial,” said Novachuk. “In this context, Kaz Minerals’ long term interests are best served as a private organisation.”

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