Endocoal agrees to $71m Chinese offer

CHINESE interest in Australian miners continues amid slumping prices and high costs.

CHINESE interest in Australian miners continues amid slumping prices and high costs, with Queensland thermal coal hopeful Endocoal yesterday announcing it had fielded an offer from a state-backed predator.

Endocoal said it had agreed to a $71 million cash takeover offer from a joint venture between state-owned China Yima Coal Group and Australian-listed, Chinese-controlled fertiliser company Daton Group Australia.

The joint venture, calling itself U&D Mining Industry, has offered 38c for each Endocoal share, representing a 71 per cent premium to the share price's volume-weighted average over the past month.

The offer, which Endocoal's board has unanimously recommended in the absence of a better one, comes after an auction process led by Macquarie that Endocoal chief executive Tim Hedley said drew a diverse range of offers.

"The company has faced an increasingly challenging operating environment, given recent global financial uncertainty and a pullback in funding available to junior resources companies," Mr Hedley said.

"The U&D offer allows shareholders to receive a significant value premium to recent trading levels and benefit from the certainty of the cash consideration."

Yesterday, Endocoal (EOC) shares surged 9.5c to 32.5c in trading on the Australian Securities Exchange.

The deal is conditional on Chinese and Australian government approvals and is to be completed through a scheme of arrangement, meaning Endocoal shareholders will vote on it at a meeting scheduled for February.

The bid follows an $830m offer for Discovery Metals by Cathay Fortune, an $85m bid for Noble Mineral Resources by China's Zhongrun (both Africa focused-targets) and Zijin Mining's recent takeover of Kalgoorlie-focused Norton Gold Field.

As part of the Endocoal deal, U&D, which is 51 per cent owned by China Yima, will provide a $4m loan facility to meet working capital requirements and make progress on a mining lease for the target's Meteor Downs South Project.

Endocoal plans to have Meteor Downs in production late next year and is targeting early 2013 for a mining lease.