Cradle quiets rumours private equity giant Denham Capital is again trying to gain control
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Niobium hopeful Cradle Resources (ASX:CXX) has poured cold water on rumours that it is the target of yet another takeover attempt by private equity giant Denham Capital.
Cradle has a 50 per cent stake in the Panda Hill niobium project in Tanzania, which it is working to move towards financing and construction.
Niobium, sometimes referred to by its old US name of columbium, is a shiny metal used in everything from hypoallergenic jewellery to jet engines to superconducting magnets.
Its major use — accounting for 90 per cent of world production — is in making high-strength, low-alloy steel.
However, uncertainty surrounding new mining laws in Tanzania has prompted Cradle to look at other opportunities in the resources sector.
Denham has about $9 billion invested in the mining, oil and gas, and power sectors.
Just six months ago the private equity firm raised $US558m ($793.5m) for its first standalone mining fund.
Denham’s Africa-focused mining fund, Tremont Investments, is Cradle’s 50/50 joint venture partner in the Panda Hill project.
Tremont also has a 19.47 per cent stake in Cradle.
An article published by AFR’s gossip column “Street Talk” on Wednesday suggested that the Bert Koth-led Denham Capital was “poised to swoop on ASX-listed Cradle Resources”.
The AFR reported that a deal is expected to be announced “imminently” and named Argonaut Securities as Cradle’s advisor.
Cradle said it remains in regular contact with Denham in relation to a variety of matters, mainly operational issues but also including a possible control transaction.
But the junior explorer stressed there was no agreement in place, and it had not received a formal offer.
“No advisors have been appointed and there is no certainty that any definitive agreement will be reached in respect of any ongoing discussions,” Cradle told investors after market close on Wednesday.
The news saw shares advance over 11 per cent to an intra-day high of 10c on Thursday morning.
The regulatory issues in Tanzania have hit Cradle’s market value hard — with shares tumbling from 32.5c in June 2017 to a record low of 7c just before Christmas last year.
Cradle and Tremont are currently engaged in a dispute over whether a definitive feasibility study for the Panda Hill project had been delivered within the meaning of the shareholders’ agreement.
The matter was referred to arbitration and a hearing is scheduled for March.
Until the dispute is resolved, the pair cannot reach a decision to mine.
Tremont tried to take over Cradle once before, but the unfavourable changes to the Tanzanian mining laws saw the deal fall through.
Cradle has been in talks with financiers to find out what the company needs to do to get the Panda Hill project financed.