This places it in a strong position to bring the 135.7 million tonne Imaloto Coal Project in Madagascar into production or fund its development without any aid from Bushveld.
In contrast, it noted that Bushveld had just £430,000 in cash and is seeking additional capital funding of about £1.5 million, without which Bushveld's ability to continue as a going concern would be uncertain.
Lemur's independent directors added the independent experts BDO Corporate Finance has stated that the offer is neither fair or reasonable, highlighting that the preferred value of five Lemur Shares is $0.760 while the preferred value of the offer consideration of three Bushveld shares is just $0.609.
It also noted that Bushveld is a Guernsey incorporated company listed on AIM and subject to the AIM Rules, leaving shareholders who accept the offer exposed to the applicable corporations and securities laws, which will be different to those as a shareholder of an Australian company.
Liquidity concerns may also emerge as AIM's focus is to provide a market for small to medium-sized companies, which tend to cover a limited breadth and depth compared to those listed on ASX.
These liquidity concerns are compounded by the fact that Bushveld shares are very tightly held with the top four out of 130 shareholders holding about 94% of the company.
This has had, and is likely to continue to have, a significant impact on the liquidity of Bushveld shares and may mean that Bushveld shareholders may be unable to realise their investment in Bushveld at a time of their choosing.
Accepting the Bushveld offer will also dilute shareholder's interests in Lemur's assets and the value that could be realised through successful development of the assets will be diluted.
The recommendation made by the independent directors excludes two directors who are also directors of Bushveld.
Bushveld had offered 3 of its own shares for every 5 Lemur shares, saying that the acquisition would create a diversified African junior miner with a swathe of mineral assets spread across South Africa and Madagascar.
The AIM-listed company is focused on exploring and developing mineral projects on the Bushveld Complex in South Africa, and its primary projects are the Bushveld iron ore project and Mokopane tin project.
Lemur has recently commissioned a mine scoping study for the Imaloto Coal Project that is expected to be completed in the third quarter of 2013.
The mine scoping study will assess the viability of a small scale mining operation based on 1 mtpa of saleable product.
Upon completion of the mine scoping study, it is intended that a detailed financial model will be constructed.
In addition, Lemur has commissioned pre-feasibility studies to assess the viability of constructing a coal fired power station in close proximity to the Imaloto Coal Project.
As previously noted by Proactive Investors on 13 May, Lemur's cash position of $17 million has more than offset any of the original premium implied by the offer.
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