Exploration company Firestone Energy has rejected a bid by Tata Power for a 30 per cent stake in a coal project in South Africa,citing a huge undervaluation of the project,a report has said.
Tata had offered R480 million for the stake in the Limpopo venture,which is a partnership between Firestone Energy and South Africa-based Sekoko Resources,the report by South African daily Business Day said.
Tata had based its bid on a valuation of R1 billion,while the true value of the asset was R1.6 billion,Sekoko Chairman Tim Tebeilatold the daily.
“I was expecting (Tata Power) to come up with a good value,but it’s not a major setback because we have a good asset,” Tebeila said.
Work on the mine is expected to start in 2012 with a production output of two million tons of coal annually,with a gradual increase to 10 million tons within five years.
In a release Firestone Energy said,”Following consideration of the offer,the board of Firestone has decided to reject the (Tata Power) offer … materially undervalues the value built up in the project to-date.”
The company had received an offer from Tata Power Company Limited to invest in its joint venture with Sekoko Resources to develop a coal mine in the Waterberg area of South Africa,it said.
Queries sent to Tata Power in this regard did not elicit any reaction immediately.