 The last eighteen months have been a challenging time for Perilya, like many miners, with its market capitalisation falling dramatically and cash resources shrinking. PEM also went through a protracted corporate period with a proposed merger with CBH Resources which lapsed only to be followed by a takeover bid by CBH in October last. The company responded by appointing Paul Arndt as it new Managing Director later that same month and in early December just after the bidders statement was issued, announced a proposed placement of 50.1% of the company for $45.5M to Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd, China's third largest zinc producer.
FIRB approval for the placement and effective foreign control of Perilya was granted just before shareholders voted overwhelming at the EGM on 5 February to approve the transaction. The injection of the funds was the saving grace for Perilya which was unlikely to survive as a viable entity for much longer this year at current weak prices without placing its operations on care and maintenance or accepting another white knight to rescue it.
This is a very relevant story in today's market. As base metal prices crashed and the financial tsunami made credit funding extremely difficult, PEM took steps to survive that included lay-offs and production cuts, but in reality were not likely to be sufficient. Paul Arndt will describe how the relationship with Zhongjin developed, how the deal was agreed to and how the outlook for Perilya has changed with this placement. A number of Australian companies are in discussion with Chinese players or would like to be so doing from the giants like Rio Tinto right down to explorers and developers. The Chinese shadow is growing on the Australian landscape!
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