Bauxite Resources Ltd offers capital return of 5c a share to shareholders

Bauxite Resources said that they set aside $10.7-million of its cash to reward shareholders with a capital return of 5c a share. This came as a counter move to thwart a takeover bid from Mercantile Investment Company. 

In November, Mercantile has announced an off-market takeover bid for Bauxite Resource of 9c a share for every two shares it did not already own.  The company promised a 6c-a-share repayment to shareholders if the takeover bid is accepted.  The bidder has announced its plan to terminate a joint venture between Bauxite Resources and HD Mining & Investment in Western Australia and stop all activities and sale all fixed assets.

Bauxite Resources responded that it had A$16.2-million in cash and cash equivalent, in addition to its real estate and mining project assets to compensate its shareholders.  The company would have about A$5.5-million in hand even after paying the proposed capital return. The board would prefer to use the fund its silica sand and hard rock quartz projects.

“The board considers the proposed capital return offers shareholders both a short-term substantial return of capital and also offers an ongoing investment in the company’s various resource projects, with the potential for real value generation over the medium to long term,” the company said in an announcement.

Shareholders will vote on the proposed capital return in Q1 2018.