Junior explorer Anchor Resources is firmly in the sights of a Chinese buyer

Small cap mining explorer Anchor Resources (ASX: AHR) is now a takeover target.

Late on Friday, the company received a bidder’s statement from Phoenix Bridge International Holdings Group Investment Co.

Phoenix Bridge is incorporated in Hong Kong and has its headquarters in Beijing, China.

In response, the board of Anchor advised shareholders to “take no action” until it had reviewed the offer and issued a target statement.

Deal terms

Phoenix wants to buy 100 per cent of the shares in Anchor in an 0ff-market deal valued at 2c per share.

That marks a nearly 54 per cent premium to Anchor’s recent trading price, with the stock languishing at 1.3c per share.

Phoenix says the all-cash offer will allow Anchor shareholders a clean exit on their investment, given the stock typically trades with low liquidity.

Debt swap

As part of the deal, Phoenix says it will assume debts payable to another Chinese group.

Anchor’s indirect controlling shareholder is China Shandong Jinshunda Group Co.

The company owes China Shandong around $15.5m plus interest, and Phoenix plans to assume the debt at a significant discount.

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“The total consideration for the acquisition of this debt is RMB 17,600,000 (being the equivalent of about A$3,721,0092 ), which is payable to [China Shandong Jinshunda Group] on completion of the transaction,” Phoenix said.

So in return for its 2c per share offer, Phoenix will assume the debt at a 77 per cent discount to the current amount owed.

Anchor sits tight

Anchor’s major shareholder is an Australian company, Sunstar Capital Pty Ltd.

As part of Anchor’s response on Friday, Sunstar confirmed that in the absence of a superior offer, it would not make a final decision on the takeover offer until it has fully considered the terms of the deal.

For now, Anchor is continuing with exploration at its projects across NSW and Queensland.

However, all of those projects remain at an early-stage level and Anchor continues to operate at a capital loss.

Late last month, the company said that based on publicly available survey data, it had identified potential base metals targets at its Cobar Basin project in NSW.