Rio closes in on $75m CZR deal

CZR Resources (ASX: CZR) has received approval from the Foreign Investment Review Board (FIRB) for the sale of its Robe Mesa iron ore project, located in the West Pilbara in WA, to the River Iron Associates joint venture (RRJV).

The FIRB approval satisfies one of the key conditions outlined in the sale agreement and means that the Federal Australian Treasurer has no objections to the transaction.

Outstanding conditions include ministerial consent under the Mining Act 1978 (WA), third party consents and foreign government regulatory approvals in relation to restrictive trade practices, competition, anti-trust and national interest.

The offer includes a working capital loan facility of $3.85m to Zanthus Resources, a CZR subsidiary, and a release deed in which Zanthus and CZR investor Mark Creasy waive joint venture rights to enable the transaction.

The CZR board agreed that the RRJV offer represented a significant premium and would better position shareholders compared to the Fenix proposal which would have seen CZR be entirely acquired by Fenix.

By retaining majority of its assets, CZR will continue to gain market exposure and the opportunity to assess new business ventures whilst considering a return of capital to shareholders.

Prior to Fenix’s bid, CZR previously engaged in takeover negotiations with China based Miracle Iron Resources who offered $102m.

However, this deal experienced repeated delays for FIRB approval and CZR chose to terminate the transaction in favour of Fenix’s bid.

CZR anticipates post-tax proceeds from the sale of $68m which will bolster its position to fund its remaining assets across WA including its Croydon gold project, Buddadoo magnetite project and Yarraloola iron ore project.