More evidence has emerged that China's hitherto unbridled enthusiasm for investing in Australia's resources potential is being tempered by caution and new-found financial discipline, following the collapse of CNOOC's proposed $30 million investment in coal seam tiddler Exoma Energy.
Citing CNOOC's inability to secure final Chinese government approvals by December 31 for its equity investment and increased farm-in into Exoma's Queensland properties, Exoma said yesterday it was "considering the impact" of the lapsed deal given that neither of the two parts would proceed.
The failure of the deal came despite Exoma announcing in late November that the National Development and Reform Commission, the important Chinese authority that has to approve any major overseas investment, had cleared the CNOOC deal. It remains unclear which Chinese authorities had failed to provide their consent by the year-end deadline.
Shareholders yesterday did not waste time passing their judgment on the impact of the failure of the CNOOC deal, cutting Exoma's shares 1.5Â¢, or 30 per cent, to 3.5Â¢.
The market had long been sceptical about Exoma's ability to procure the CNOOC funding since the two parties announced their equity-plus-farm-in deal in mid-September. At the time, Exoma's shares were trading just under 10Â¢. Under the proposed deal, CNOOC was to have taken an immediate $10.7 million equity stake in Exoma followed by a further investment worth about $6 million, also priced at 17.2Â¢ a share, to emerge with a 19.9 per cent shareholding.
The second part of the deal was to see CNOOC increase its stake in Exoma tenements from 50 per cent to 60 per cent by carrying $12.7 million of joint venture exploration expenditure.