Sierra Rutile (LON:SRX) has agreed to sell itself to the Australian mineral sands company Iluka Resources (ASX:ILU) for a total of 215M GBP. Iluka plans to acquire the company in an all-cash deal, paying the Sierra Rutile shareholders 36 pence per share. This might seem like a fair deal considering the company’s share price has been trading in the lower twenties (or even below that) for a while, but we are a little bit disappointed with the offer as Sierra Rutile has just finished an expansion and would be able to benefit tremendously from an uptick in the rutile prices.
Unfortunately it does look like Iluka will walk away with the asset, but there might be a blessing in disguise for another company we are keeping an eye on. One of the largest shareholders of Sierra Rutile, Pala Investments, also is the majority shareholder of Nevada Copper (NCU.TO). Pala also owned approximately 53.4% of Sierra Rutile, and those 318.1M shares will now be sold to Iluka for approximately 114.5M GBP in cash. That’s approximately US$151M, and you never know Pala might be planning to increase its involvement with Nevada Copper now its treasury will be topped up.
Go to Sierra Rutile’s website
The author had a long position in Sierra Rutile but sold, the author still owns a long position in Nevada Copper which used to be a sponsor of the website. Please read the disclaimer