The owner of the historic Christmas Island phosphate rock mine has been quietly absorbed by its biggest shareholder in a $100 million deal designed to cut costs and streamline management ranks.
The ASX-listed CI Resources acquired the last remaining shares in the Clive Brown-chaired Phosphate Resources a week ago, creating a group with $127 million of net assets including $45.8 million cash, most of it contributed by the target.
Phosphate Resources, a public but unlisted company, has owned and operated the Christmas Island mine since 1990. It also provides property services on the island to the Department of Immigration and Citizenship.
Phosphate Resources reported an $18.8 million net profit for the past financial year, down 22 per cent on 2012-13 because of lower sales and higher operating costs.
CI owned 63 per cent of Phosphate Resources when it launched its scrip bid in October.
The deal, which valued Phosphate Resources at $35.06 a share, or $100 million, was deemed fair and reasonable by independent expert RSM Bird Cameron. The expert said the deal would provide liquidity for Phosphate Resources shareholders, allow a cleaned-up and enlarged CI to pursue other opportunities and could make CI "a more attractive takeover target".
Mr Brown, a State development minister in the Gallop Government, has joined the CI board as a non-executive director.
Phosphate mining on Christmas Island, at Flying Fish Cove, began in 1897 when George Clunies-Ross and John Murray established Christmas Island Phosphate Company Ltd. The mine fell into government hands after World War II before it was handed to the Union of Christmas Island Workers in 1987.
The phosphate rock mine has a five-year life. Phosphate Resources is set to be granted access to a further 100 ha, once designated for a failed space port project, to extend the project life.