CAMEC aiming for Katanga

Central African Mining & Exploration (CEAMF-O, CFM-L) (Camec) has announced it intends to bid for Katanga Mining (KAT-T, KATFF-O).

Camec’s “indicative” bid is 15 shares for one Katanga share. That would value the company, whose principal asset is the Kamoto copper-cobalt project in Katanga province, Democratic Republic of the Congo, at $20.85 per share or $1.6 billion.

Camec holds a 75% interest in three large copper concessions in Katanga: 467, 469 and Mukondo. It purchased that interest for shares from Zimbabwean businessman Billy Rautenbach, who headed Camec’s 25% partner, state mining agency Gnrale des Carrires et des Mines from 1998 to 2000. Rautenbach received 172 million Camec shares (then 19% of the company) for the assets; that holding may have since been diluted to around 8%.

In May, South African authorities sought Rautenbach’s extradition from Zimbabwe to answer charges of fraud at the South African operations of Korean car maker Hyundai. The Congo’s deputy mines minister, Victor Kasongo, said South Africa had asked for Congolese assistance in detaining Rautenbach, as well.

Camec’s bid comes after it assembled a block of 17 million Katanga shares, a 22% holding, acquired from other large shareholders for 74.7 million Camec shares.

In response, Katanga applied for a cease-acquiring order from the Ontario Securities Commission, and put through a shareholders’ rights plan, which would have flipped in if Camec had acquired more shares. Shareholders are to vote on the increase in authorized capital at a meeting on July 17.

Camec put a hold on an agreement to acquire another block of 6 million shares, apparently to avoid Katanga’s poison pill, but also after discussions with the Securities Commission where the Commission said it would not act on Katanga’s application.

The largest block of Katanga shares is held by Congolese businessman George Forrest, who owns 24%. Katanga CEO Arthur Ditto controlled 9% of the shares at last report (in April), and another large shareholder that would be expected to be in management’s corner is the RP Explorer Master Fund, where Forrest associate (and one-time business partner of Rautenbach) Dan Gertler is a beneficial owner; RP owns 15.7%, some of which was acquired from retiring chairman Robert Buchan.