By Jesse Riseborough
Dec. 12 (Bloomberg) -- PT Bumi Resources, Indonesia's biggest coal producer,
offered A$455 million ($397 million) for Herald Resources Ltd., saying it can
accelerate the company's delayed zinc and lead mine in Sumatra. Herald shares
rose to exceed the bid price.
PT Bumi will pay A$2.25 a share for Perth-based Herald, Bumi said in a
statement lodged today with the Australian Stock Exchange. That's 23 percent
higher than yesterday's closing price. Herald rose as much as 29 percent to a
record A$2.36, and traded at A$2.33 at 11:10 a.m. in Sydney, valuing it at
A$461 million.
Herald has been waiting for government approval of the $192 million Dairi
zinc and lead underground mine for two years. Indonesia is seeking to keep more
of its resources in local hands after prices for commodities including oil,
zinc and copper soared in the past five years.
Dairi ``is one of the world's best undeveloped zinc deposits, it is a great
deposit,'' Peter Arden, an analyst at Ord Minnett Ltd. in Melbourne, said
today. ``It should have been in production three or four years ago. Where they
were going wrong is that they just didn't have enough local horsepower. It
would be a really big prize for a local group.''
Australian zinc and lead producer Perilya Ltd. bought an 8.9 percent stake in
Herald last month and may seek to accumulate a strategic stake, Macquarie Group
Ltd. said in a Nov. 20 report.
``Bumi's experience in the Indonesian mining sector and the requirements of
the Indonesian regulatory process make it uniquely positioned to advance'' the
Dairi project, Bumi Chairman Ari Hudaya said in today's statement. The offer
will eliminate ``commodity price uncertainties and the risks of further delays,
cost overruns and funding demands,'' he said.
The project, 20 percent owned by PT Aneka Tambang, is scheduled to produce
220,000 metric tons of zinc concentrate and 100,000 tons of lead concentrate a
year.
Credit Suisse Group is providing financial advice to Bumi for the offer and
law firm Mallesons Stephen Jacques is the Indonesian company's Australian legal
adviser. Herald Executive Director Michael Wright couldn't immediately be
reached for comment.
To contact the reporter on this story: Jesse Riseborough in Melbourne at
[EMAIL PROTECTED]
Last Updated: December 11, 2007 19:46 EST
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