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The second-largest shareholder of copper miner Finders Resources has vowed to shoot down a $178 million takeover bid from Eastern Field Developments.

Taurus Funds Management now manages 87.3 million Finders shares, giving it an 11.3 per cent stake .

The major shareholder has told Finders (ASX:FND) that it does not intend to accept the 23c cash offer because it “does not reflect the fair value” of the company’s shares, Finders said this morning.

Finders’ shares climbed 4.3 per cent to an intraday high of 24c immediately following the news.

FND shares over the past six months. Source: Investing.com
FND shares over the past six months. Source: Investing.com

Eastern Field is Finders’ largest shareholder with a 19.8 per cent stake held through Provident Minerals, Indonesian investment firm Saratoga and Indonesian copper-gold miner Merdeka.

The suitor is “not surprised” by Taurus’ intention not to accept its offer, director David Fowler said in an email to Stockhead.

“Taurus and its chairman Gordon Galt, who is also a director of Finders, have a long history of investment with Finders — though it has been an unsuccessful one.

“We understand that Taurus wants Finders’ share price to be higher. So do we, but that is down to Finders’ management to deliver on what they promised shareholders (28,000 tonnes of copper for 2017) — and they are continually failing shareholders.”

Finders has previously signalled that its Wetar mine in Indonesia will produce between 4000 and 5000 tonnes of copper in the December quarter, down from over 6000 tonnes in the previous three quarters.

However, Eastern Field disputes this, saying Finders’ technical expert BDA made clear in the target statement this week that Wetar is expected to produce only 4170 tonnes of copper in the current quarter.

“Despite this, Finders continues to guide investors in its latest presentation that Wetar will produce between 4000t and 5000t this quarter, a clearly misleading range when Finders’ own technical expert has been advised by Finders that production will be 4170t, at the bottom of this range,” Mr Fowler said.

“We believe most of this shortfall relates to reprocessing of dump leach material that Finders had always planned to do during 2017.”

Eastern Field is threatening to take the fight to the Takeovers Panel if talks with Finders are unsuccessful.

“We will be dealing directly with Finders and independent expert Deloitte on these matters, and we will not hesitate to appeal to the Takeovers Panel if we don’t receive satisfactory answers,” Mr Fowler said.

Eastern Field has now made its offer conditional on achieving a shareholding of more than 50 per cent, not 90 per cent, because it expected Taurus to side with Finders.

“The smart money on the Finders share register has made clear that they do not see much value in Finders above our offer price,” Mr Fowler said.

“Taurus’ decision last month to not exercise options at 25.66c to provide Finders with much-needed exploration funding — and at a time when Finders cannot fund its debt service reserve account — is also telling.”

Despite recent production downgrades and other issues Finders is claimed to be facing at the Wetar mine, shareholders appear to be standing by the company.

As of December 5, Eastern Field had only received acceptances for less than 1% of Finders shares.

Earlier this week, Finders revealed that financial advisor and independent expert Deloitte had determined Eastern Field’s offer was “neither fair nor reasonable”.

Deloitte assessed the fair market value of Finders shares at 31c to 35c.

The company again reminded shareholders that they should reject Eastern Field’s offer, which is due to close on December 20.