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Africa-focused copper star First Quantum Minerals has won agreement for its improved £140 million bid for Adastra Minerals.

Toronto and AIM-quoted First Quantum, which has soared from its 2001 float price of 145.5p to £24 today, has won acceptance for its initially hostile shares-and-cash offer by increasing the value of the package to around C$3.20 (160p) a share. The terms contain a maximum cash element of £21 million, which includes 13p-a-share payment to accepting Adastra shareholders in lieu of a dividend.

Adastra boss Tim Read, who is accepting First Quantum shares for his stake, argues the present deal represents an 80 to 85 per cent improvement on the terms originally proposed by the bidder. First Quantum is buying Adastra primarily for its Kolwezi copper and cobalt tailings project in Congo's mineral-rich Katanga province.

Japanese group Mitsubishi had offered to put £20 million equity into Kolwezi, plus £7 million loans, in exchange for a 14.9 per cent stake. Read, a former Rothschild banker, says relations between the two companies are excellent, but it is not certain that the Mitsubishi agreement will survive the handover of power.

Sharers in Adastra have risen from 74p when Growth Company Investor recommended them in January 2005 to 157.5p lately, while First Quantum has gone from our 157p recommendation four years ago to £24. Some profit-talking might be prudent, but the enlarged group faces potentially exciting longer-term prospects.


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