PERTH (miningweekly.com) – ASX-listed Highlands Pacific has received a takeover offer from Canadian shareholder Cobalt 27 Capital Corporation.
Under the terms of a scheme implementation agreement, Cobalt 27, which already holds a 13% interest in Highlands, was offering shareholders 10.5c a share for their interest in the takeover target, valuing Highlands at around A$115-million.
Highlands on Wednesday told shareholders that the offer price would increase to 11.5c a share if the closing spot price for nickel exceeded $13 220/t before the end of December this year, over a period of five consecutive trading days.
The takeover offer will require the approval of 75% of Highland’s shareholders, with the company noting that its largest shareholders, collectively holding a 30.1% interest in the company, had already stated their intention to vote in favour of the takeover offer, in the absence of a superior proposal.
Highland’s independent board members have urged the company’s shareholder to vote in favour of the offer, noting that the cash offer represented a 43.8% premium to the company’s closing price on December 24, and a 30.1% premium over its one-month volume weighted average share price.
The takeover offer comes as Cobalt 27 took the decision not to extend a cobalt/nickel streaming deal with Highlands, after the two companies failed to close the transaction which was initially signed in May last year.
Highlands said on Wednesday that with the streaming deal now not proceeding, the takeover offer from Cobalt 27 would provide certainty of value for shareholders, as the Highlands share price could fall.
Meanwhile, Highlands and Cobalt 27 have also agreed to use their best endeavours to negotiate an agreement with PanAust, under which that company would return its 11.8% shareholding in Highlands, and cancel any outstanding debts owed by Highlands to PanAust, in return for Highlands transferring its 20% interest in the Frieda River joint venture to PanAust.
A feasibility study, conducted by PanAust, found that the Papua New Guinea government would need to invest some $739-million into road, airfield and port upgrades, while a further $351-million would need to be spent on a 340-km slurry pipeline connecting the Frieda River process plant with the Port of Vanimo, to make the copper/gold project viable.
The study estimated a life-of-mine yearly production average of 670 000 t of concentrate, containing 175 000 t of copper and 230 000 oz of gold, over a mine life of some 33 years.