Minmetals extends Anvil offer to resolve Congo dispute

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Chinese group Minmetals Resources has extended its $1.3 billion takeover offer for Africa-focused Anvil Mining to December 9, to allow more time to resolve a dispute over contracts with Congo which threatens to scupper the whole deal.

The previous deadline was November 24.

Congo's state-owned mining body Gecamines, under pressure to raise cash after years of under-investment, has indicated that it believes the Minmetals deal announced in September triggers a review of the lease for Kinsevere, Anvil's flagship investment, and Mutoshi, a copper-cobalt project.

Kinsevere is 95 percent owned by Anvil, which in turn holds a lease from Gecamines. Mutoshi is 70 percent owned, with the remaining stake held by Gecamines.

Anvil, 39 percent owned by commodities trader Trafigura, warned last month the deal could fail to complete if agreement is not reached with Gecamines. Without prior consent from Gecamines, Minmetals could withdraw the offer.

Anvil has said its position is that there is no legal requirement for Gecamines' approval and no legal right to renegotiate the contractual agreements if the company is taken over.

There is, however, a requirement to offer Gecamines pre-emption rights over Mutoshi.

The Democratic Republic of Congo is facing presidential elections on Monday, testing the resource-rich but cash-poor nation's stability after years of misrule. Delays to the election are possible, though, potentially adding to Anvil's woes.

Analysts say a failure to complete the deal could weigh heavily on Anvil shares. The miner has effectively been up for sale since August, when Trafigura said it was planning to sell its stake, prompting the company to hire advisers to review its own alternatives.

In the absence of a bid, we believe Anvil's shares should trade in the range of a 26-53 percent discount to our $7.94 net asset value including the expansion based on current peer group valuations, or $3.77-5.92 per share, RBC analysts said in a note. If the bid succeeds, the upside from the current share price is only 9 percent.

The offer of C$8.00 a share had been due to close on November 24. Anvil's Toronto shares were trading at C$7.28 at 1540 GMT.

Chinese companies, hungry for resources, have had a mixed record with mining takeover deals in Africa. In the most recent successful move, China's Jinchuan bought South African-listed Metorex, which also has assets in Congo, for 9.1 billion rand, or $1.1 billion at current exchange rates, in July.

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