Conzinc values IOL at $4.0m

Press, Volume CXVI, Issue 34129, 15 April 1976, Page 18

Conzinc values IOL at $4.0m

! (New Zealand Press Association—■ Copyright) e SYDNEY. ’ Conzinc Rio-Tinto of Australia. Ltd, e placed a theoretical value of more than v| sAust4.om on the minerals and oil explora--2' tion interests of lOL Petroleum, Ltd.

c-l It did so by announcing it 'would make a share ex-i-|Change offer of 3 C.R.A. il'shares for every 10 1.0. L. ’-'shares it does not already i-'hold in the company. O' Based on Monday’s closing r price of 285 c for C.R.A.. the fi offer values 1.0. L. shares at l_ ‘Bsc each. i- As 1.0. L. has 4.5 m shares ’ on issue tse offer values the r companv at just under _ S4.om. C.R.A. shareholders might . (consider this a high value to “ i place on a company which ;at December 31 had ■deficien :y of $3.3m in share-, (holders’ funds. 1.0. L. ’s accounts at De-! (cember 31 showed total (assets of 84.7 m as against: Total liabilities of sB.om. However, most of 1.0.L.’s ! mineral and oil exploration i prospects are in its books at ! virtually nothing while its 12 per cent stake in the promising Hail Creek coal project is valued at about $500,000. For the bid to be justified in the eyes of C.R.A. share-

.holders it would seem the exploration prospects such las Hail Creek would have to ibe worth many times more ; than the value in the 1.0. L. I books. ■ C.R.A. believes a 12 per (cent interest in Hail Creek is worth more than $500,000. The terms of a recentlycompleted option deal with Associated Australian Resources suggests C.R.A. could be prepared to pay J more than 10 times the value of Hail Creek interest as in the books of 1.0. L. In ; return for an option over a 126 per cent interest in Hail 'Creek, C.R.A. agreed to pay A.A.R. C.R.A. has taken out an ■ option over a 26 per cent (interest in the Hail Creek project which, if it exericises, will cost sl.om cash and 6.5 m C.R.A. shares. At current market prices that places a value of $18.5m on a 26 per ceni interest. On this basis a 12 per cent interest would be worth about sB.sm. Apart from Hail Creek. 1.0. L. also has interests in a inumber of other promising Queensland Coal prospects, land overseas oil prospects.

However, because none of the prospects in which 1.0. L. has an interest has yet to reach the development stage, it is very difficult to determine whether the C.R.A. offer is generous or not. 1.0. L. shareholders could console themselves in the thought that if they accept the offer they would retain an interest in the prospects, and that if they do not accept the offer, the future of the company without C.RA. backing is not too bright. i o begin with 1.0. L. owes [C.R.A. sB.3m which the company has very little hope of repaying unless it were to strike oil soon. On the other hand, bj- acquiring the 48 per cent 'interest in 1.0. L. it does not (already hold. C.R.A. is removing the possibility of a subsidiary defaulting on a debt in the future.