Following a $455 million takeover offer from PT Bumi Resources on Wednesday, the directors of Herald Resources (HER) today said the bid is hostile and advised shareholders to take no action until further review.
Indonesion coal miner, PT Bumi Resources offered $2.25 for each share in the coal and base metals exploration company. The offer propelled Herald resources by as much as 26% on the day.
PT Bumi made the bid saying it believed the all-cash offer would be very attractive to Herald.
However, Herald did not share in PT Bumi's belief.
In a note to the stock exchange, Herald said:
"Your directors wish to confirm that the bid is hostile and unsolicited and their advice is that shareholders take no action in relation to the bid until your board has an opportunity to fully consider the bid and make a formal recommendation," Herald Resources said.
Bumi has its eyes on Herald's prized $253 million zinc-lead Dairi project in Sumatra, in North Indonesia, which had completed a feasibility study and is waiting for environmental approvals to proceed to full development.
In response, Herald directors said they are concerned with PT Bumi's statement that its "experience in the Indonesian mining sector and the requirements of the Indonesian regulatory process make it uniquely positioned to advance the Dairi zinc/lead development in an effective and timely fashion."
Herald said it is not aware of ‘any special circumstances' which may uniquely position PT Bumi in securing the forestry approval required to develop the Dairi Project or in ‘any way disadvantage you as owners of the company relative to PT Bumi'.
In a note to the stock exchange today, Herald Resources disclosed the Company's progress to date in regards to the Dairi Project.
"The Dairi project, in which Herald has an 80% stake, is the most exciting in the company's history. At the Anjing Hitam deposit, we have a high value reserve of 6.6 million tonnes grading 115% zinc and 9% lead," chairman Terry Allen said.
"Despite the success to date, we feel we have only just "scratched the surface" of what is clearly a major new zinc/lead province," he added.
Shares in Herald added 2 cents to close at $2.29.
