Oxiana and zinifex Merge News – up 14% from last closing price

Zinifex website – http://zinifex.com.au/

Zinifex shareholders will receive 3.19 Oxiana shares for each share held by them. The offer values Zinifex shares at A$12.68 each, up 14% from last closing price

Australian miner Oxiana Ltd. has agreed to purchase rival Zinifex Ltd. for A $6.2bn (US$5.8bn) in an all-stock deal, forming a A$12bn miner and the world’s second-largest producer of zinc.

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Under the agreement, Zinifex shareholders will receive 3.19 Oxiana shares for each share held by them, the two Melbourne-based companies said in a statement today. The offer values Zinifex shares at A$12.68 each, 14% more than the last closing price.

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Oxiana, which is trading at 19 times estimated earnings, fell 10 cents, or 2.5%, to A$3.87 on the Australian Stock Exchange at 2:05 p.m. Sydney time. Zinifex, which trades at 11 times earnings, rose 96 cents, or 8.6%, to A$12.09.

Oxiana and Zinifex shareholders will own 50% each.

Zinifex CEO Andrew Michelmore will head the merged entity.

Oxiana will more than double sales, boost zinc output fivefold and gain lead and silver projects in Australia and Canada, adding to copper and gold output. Zinifex brings A$2.2bn of cash to fund new projects and acquisitions.

The combined Oxiana and Zinifex, would have had A$2.8bn in revenue and net profit of A$918mn in 2007, the companies told the Australian Stock Exchange. The combination will have A$2.5bn in cash, with Zinifex contributing A$2.2bn after selling its stake in smelting unit Nyrstar NV.

“Both the companies believe in strong growth continuing for the minerals we produce,” Michelmore, 55, said in a teleconference. “There is no hesitation in saying let’s put the two companies together.”

Oxiana Chairman Barry Cusack will retain his position in the combined company. Oxiana’s CEO Owen Hegarty, 59 will become a director.

Oxiana owns the Sepon gold and copper mine in Laos, the Golden Grove zinc, copper and gold mine in Western Australia and is spending A$1.1bn developing its Prominent Hill copper and gold project in South Australia.

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