Metorex bid set to lapse

[] — METOREX has long had a band of faithful followers, and so many turned out in force at the AGM at the Grace Hotel in Rosebank that there weren’t enough seats in the relatively small conference room.

If they were mainly interested in the fate of the controversial bid for Copper Resources Corp (CRC), which closes on January 18 (Friday), they received both good and bad news.

The bad news is that the bid will almost certainly lapse for not receiving 50% acceptance; the good news is that, in spite of this, chairman Simon Malone is adamant that: “There’s no doubt that the deal is firm”.

The Forrest group’s 40% is irrevocably and unconditionally committed and Metorex has also firm acceptances from holders of about 5% of the shares, that it has approached – as is allowed by the laws of the British Virgin Islands, the relevant jurisdiction – outside the formal bid.

“Ownership is in our hands and the board is with us,” Malone said.

After the deal closes, Metorex will be able to buy shares in CRC on open market “with extreme caution” – in the words of CEO Charles Needham – but only if the price falls back from the current 170p to the 125p bid price.

Metorex also has a 5% interest (which could rise) in MMK, which in turn has an interest in CRC that could be rolled up. As Malone says, the group now has one more listing in London than it needs or wants, and the long-term plan must be to eliminate one of them.

Elsewhere, it was generally a positive story, the exception being the Kasemba prospect in Zambia, which is being reviewed after results of a $1m exploration programme were below expectations.

But Musonoi, in Congo (Kinshasa) is looking exciting, and Malone hopes it could be an even bigger mine than Chibuluma, which, while still expanding, produced 10,800 tonnes of copper in financial 2007, and earned an earnings before interest, tax, depreciation and amortisation of R323m. Musonoi’s drilling results should be available by the end of February.

There have been record production months of fluorspar, copper and some other minerals. Malone concedes that the sub-prime crisis will have a medium-term impact on commodity prices, but remains broadly optimistic.

He also has no worries about the licensing issue in the Congo, which he calls an “enormous red herring.” He reckons the current government inquiry will be allowed to gather dust, though state mining company Gecamines may “harass” companies that haven’t met their exploration targets.

And broadly, Malone is bullish about the company. He enthuses that it has an “exciting” project pipeline. Management continuity is assured, as “The Yuppies are in place to take over from the geriatrics.”

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And he holds out the likelihood of more corporate activity which, reading between the lines, could happen sooner rather than later.

But however loyal its fans — Simon’s Army, as it were, in an analogy with Lonrho’s Tiny Rowland – are, the broader market was unmoved by all this optimism. True, a loss of a few cents in the share price this morning, to 1,890c, was a steadier performance than the JSE as a whole, but is way off the 2,950c high hit last July.

Maybe investors are deterred by a historic earnings multiple of almost 17, though it should fall sharply when the interim results are published in the second half of February.