China-based U & D Mining's proposed A$71 million ($73.5 million) takeover of Queensland coal explorer Endocoal has been cleared by Australia's Foreign Investment Review Board, Endocoal said in a statement Friday.
A letter dated December 5 from the FIRB's secretariat said the Australian government agency had no objections to U & D Mining's proposal to acquire 100% of Endocoal's 187 million shares and to provide A$4 million of interim debt funding to the company.
"This statement of no objections stands for 12 months from today [Friday], to allow this proposal to be undertaken," said FIRB in its letter, which Endocoal published Friday.
Endocoal announced Friday the appointment of Ernst & Young to provide an independent opinion on whether the Chinese company's takeover proposal was in the best interests of the coal company's shareholders.
A meeting of Endocoal shareholders in February 2013 is to consider the U & D Mining proposal which is supported by the Queensland coal company's directors.
U & D Mining, a subsidiary of China's Yima Coal Group made a takeover offer to Endocoal shareholders of A$0.38/share on October 29, which at the time represented a 70% premium to the company's one month weighted average share price.
The company had been in talks with a number of possible suitors.
Endocoal has five exploration tenements in Queensland's Bowen Basin coal field with marketable coal reserves of 13 million mt and a total coal resource of 498 million mt, including its Meteor Downs South project for export-grade thermal coal.
The company is seeking capacity in the second stage of the Wiggins Island coal terminal expansion at Gladstone port in central Queensland for its Meteor Downs South project.
The share price of Endocoal was 6.3% higher at 5 pm Sydney time Friday (0400 GMT) on the Australian Securities Exchange at A$0.33/share.
