Indonesian firm PT Cakra Mineral Tbk (CKRA) has offered at least Aus$70 million to take over Australian company Cokal Ltd, which is developing a coal project in central Kalimantan. CKRA, backed by one of Indonesia’s biggest conglomerates, the Sinar Mas Group, is looking for metallurgical coal for a planned pig iron smelter and nickel pig iron smelter.

Cokal said in a stock exchange release last month that it had received an incomplete proposal from Cakra, which operates iron ore and zircon sand mines, and would engage with Cakra to evaluate the offer.

Under the deal, Cakra would offer Aus$70 million in cash, or Aus$0.15 a share, which would be a 58% premium to Cokal’s last close before the offer. Alternatively it would offer Aus$87.5 million in Cakra shares, worth about Aus$0.19 per Cokal share at current prices.

In an announcement on April 2, Cokal said that it had entered into detailed discussion with CKRA. “The discussions have been progressing but have highlighted the need to jointly manage the process on both the Australian and Indonesian Stock Exchanges and under two company regulatory regimes.

“We believe that as this is the first such transaction of this type between the two countries, there is no precedent. An understanding of these processes has been extremely important before reaching an agreement on a bid implementation agreement. Cokal therefore has not formed any opinion on the proposal.

“As the discussions are still in progress and both parties remain engaged positively in this process, it remains Cokal’s intention is to engage with CKRA in evaluating the proposal,” Cokal said in the statement.

CKRS, which has a market value of $60 million, would need to nearly double its share base to go ahead with the acquisition, which would need approval from the Indonesian Financial Services Authority ahead of a shareholder vote.

“We hope that with this smelter we are developing we can produce pig iron so we will no longer be exporting raw materials,” CKRA’s corporate secretary Dexter Sjarif Putra told Reuters.

The proposal is well below the Aus$124 million that Cokal was offered in October 2013 from Singapore firm Blumont Group. That deal was scrapped after Blumont’s shares plummeted.

The offer comes as Cokal has been struggling to line up funding for its promising $75 million Bumi Barito Mineral (BBM) metallurgical coal project in Indonesia, with coal prices trading just above six-year lows.

Cokal has lined up $110 million in project financing from Platinum Partners and Cedrus to build the BBM mine, aiming to start production in the second half of 2016.

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