Companies: CFM   

Phil Edmonds’ Central African Mining & Exploration Company (CAMEC) says it will make an all-share bid worth around C$2 billion (£957 million) for Katanga Mining.

AIM-quoted CAMEC, which already holds 22 per cent of Toronto-quoted Katanga, has significantly increased the potential paper value of its originally mooted £773 million offer and claims shareholders with another 32 per cent of Katanga have agreed to accept its offer. Katanga, whose attraction lies in its rich Kamato copper and cobalt project in the Congo, says it is exploring ‘strategic alternatives’ to CAMEC’s bid, arguing that under present rules the ‘soft lock-up’ agreements that CAMEC claims to have with key Katanga shareholders would not prevent them from accepting an alternative offer worth at least seven per cent more.

RP Capital, which has recently built up a sizeable stake in Katanga, says it is 'strongly opposed' to the CAMEC offer. The projected bid puts a price of around 12.5p on Katanga, whose shares now trade at about the equivalent of that level, having risen nearly 50 per cent since our mention at the end of June.

Katanga argues the regulations preclude CAMEC, whose shares have risen to 73.75p, from making an all-share offer to its shareholders until 18 August and Katanga’s boss Art Ditto urges shareholders to take no action until they receive a formal offer.

Some observers suggest CAMEC would not be unhappy to see a rival over-bidder appear, though Edmonds says the Katanga bid is designed to ‘create a leading African copper and cobalt producer’. Hold on.