Mineral Resources acquired a 12.8 per cent stake in Aquila Resources, beating China's Baosteel Group in acquiring a bigger stake in a large-scale iron ore project that would develop a $6.9 billion port, rail and mine.
The Perth-based miner, the fifth-largest iron ore producer in Australia, filed on Thursday a notice of its buy-in into Aquila. The purchase seeks to ensure that the Western Australia project would go into production as soon as possible.
In May, Baosteel, owner of China's largest listed steelmaker, and Aurizon Holdings offered $3.40 per share to purchase Aquila with a A$1.4 billion valuation for the company that would provide Aquila a half stake in the project in West Pilbara.
However, Mineral offered to buy 52 million shares of Aquila for $3.72 and $3.75, higher than the offer of Baosteel and Aurizon which already owns a 40 per cent stake in Aquila.
Mineral Resources Managing Director Chris Ellison said in a statement that the company has financial capacity to make a meaningful contribution towards development.
IG Markets strategist Evan Lucas found it unclear if Mineral was positioning for a takeover bid or wants to be involved n a joint venture. He explained, "Paying $3.75 a share for a serious seat at the table would suggest bidding war is on and I would therefore assume that Mineral Resources is likely to bid at least block the bid having paid a 35 cent premium."
However, news of the buy-in resulted in Mineral shareprice slipping 4.3 per cent, which closed at A$9.70 in Sydney trading, its lowest level in 10 months. Meanwhile, Aquila also shed 1.9 per cent to A$3.54.