China-based private equity firm Cathay Fortune has offered to buy Australian copper producer Discovery Metals for $848m.
The bid is part of an ongoing trend of resource acquisitions across the globe against the backdrop of a recession and falling commodity prices in the mining industry.
Cathay currently owns a 13.7% interest in Discovery, while China-Africa Development Fund owns the remaining stake.
The private equity firm is now seeking a 75% controlling stake and offered to buy out at a price of A$1.70 ($1.73) per share in an all-cash transaction. The two companies will form a joint venture if the deal is successful.
State-owned China Development Bank has agreed to provide a $600m loan in support of the deal.
Discovery Metals is evaluating Cathay Fortune's takeover proposal and will respond after the board has considered its terms, the company said in a statement.
If the transaction goes ahead, Cathay will gain ownership of the Kalahari copper-silver prospect in northwest Bostwana, which Discovery currently operates.
The mine has the capacity to generate 36,000 metric tons of copper and 1.1 million ounces of silver per year.
Australia's Foreign Investment Review Board approved the deal but the company awaits regulatory approvals in China. Cathay currently manages an investment portfolio worth $3bn in the country.
Image: Chinese equity firm Cathay may soon acquire the copper mine in Botswana. Photo: Discovery Metals Limited.