BILLIONAIRE philanthropist Clive Palmer has proposed a $327 million merger between his investment vehicle Resource Development International (RDI) and junior iron-ore explorer Australasian Resources.
Mr Palmer already holds 66.4% of Australasian, which is at the financing stage of its $2.7 billion Balmoral South project in Western Australia's Pilbara.
The project is an alliance between Australasian and its 6.3% shareholder and China's fourth largest steel maker Shougang Corporation.
RDI's proposal to acquire Australasian by a scheme of arrangement places a notional price of $2.20 on each Australasian share.
Australasian shares ended 33.5¢ higher at $1.53. RDI, which is finalising a proposed $5 billion initial public offering later this year ahead of listing on the Hong Kong Stock Exchange, plans to offer its shares to Australasian as consideration for the merger. RDI is also considering an Australian listing.
Mr Palmer plans to expand RDI into a diversified resources giant, which could be worth up to $18 billion, by providing iron ore, nickel and energy to China.
RDI's interests include rights to 20 billion tonnes of iron ore on the Balmoral tenements held by Mr Palmer.
Australasian has negotiated with Mr Palmer for the right to mine 1 billion tonnes of iron ore at Balmoral, with production expected to start in 2010-11 at 12 million tonnes a year.
Australasian said the merger proposal was not a formal offer by RDI for Australasian shares, but that if the board accepted it Australasian staff would be engaged to manage RDI's iron ore division.
Australasian said its 6.3% shareholder Shougang was "receptive to the opportunity". Shougang could earn a 50% interest in the Balmoral South project by offering to finance it with an interest-free loan and agreeing to buy all iron ore from the project for 25 years.
"The two parties will continue to advance current plans and efforts to obtain a finance offer from Shougang and develop the Balmoral South iron ore project," Australasian said.
Australasian expects to get environmental approval for production of 24 million tonnes a year by October.
AAP
