Majority shareholder wants to buy out Perilya

Chinese mining company offers $0.35 a share.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Just only a few days after releasing its half-year report, Broken Hill miner Perilya (ASX: PEM) has received a takeover offer from its majority shareholder, Chinese miner Zhongin Lingnan.

The offer is for $0.35 per share, which the company states is a 59% premium to the closing price of $0.22 on the date that a trading halt occurred, 30 August.

Zhongin Lingnan owns 53.7% of the Perilya stock, which it bought in 2009 at the depth of the GFC. The strategic alliance assisted Perilya greatly since it was on the verge of shutting down its mining in Broken Hill, where it was among several silver mines.

At that time, the company was wanting to buy back a large amount of silver it has previously sold to another mining company for $55 million. Now the 11.2 million ounces of silver is worth about $300 million.

The directors of Perilya have given their unanimous support to the proposal, and have stated that it is in the best interest of the shareholders. It must also have the approval of shareholders, the Australian Foreign Investment Review Board, ASIC, ASX and Chinese regulatory approvals.

The Chinese miner has said that it intends to continue existing mining operations in Australia and the Dominican Republic as well as the ramp up plans for the Potosi deposit and the possible re-opening of North Mine, both located in Broken Hill. All key personnel at both the Australian and Dominican Republic operations, as well as the corporate and executive team, will be retained.

In the half-year report, revenue was down 14% from $161.3 million to $139.1 million. A net loss of $19.6 million resulted compared to $5.4 million profit in the previous corresponding period. This was the first loss since 2008. No interim dividend was declared.

Individual commodity sales were down, weakened by sagging commodity prices in zinc, copper, lead. Silver and especially gold have pulled back over the past year.

Foolish takeaway

The takeover may be the best thing for the company as mining and commodities markets have yet to recover. Securing financing to keep production and development up is the one of the greatest hardships for miners even when they are already producers.

Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

More reading


Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »