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Sierra Rutile takeover in doubt as bidder Iluka raises objections

Published: 07:59 29 Nov 2016 GMT

picture of dredging operation
Sierra Rutile's dredging operation

Sierra Rutile PLC’s (LON:SRX) proposed merger looks to be in jeopardy after bidder Illuka raised doubts about two of its dams in Sierra Leone.

lluka has written to mineral sands group Sierra Rutile (SRL) saying it considers that there are geotechnical risks at the dams.

These risks will result in the non-satisfaction of the material adverse change condition precedent under the merger implementation agreement (MIA),  it said.

In a statement, Sierra Rutile said it does not believe that there has been any event or fact that will invoke the material adverse change condition.

Production remains in line with management's and market expectations and its operations are within appropriate industry standards, it added.

The proposed date for the merger to close of 29 November, however, will not now be met said lluka though it has offered to talk to Sierra Rutile about a possible extension.

SRL added is considering all options and has reserved all rights available to it under the MIA, but its shares will not now be cancelled on AIM on 29 November.

The 36p per share cash offer from Iluka values Sierra Rutile at £215mln and had been agreed by its board and a majority of shareholders.

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