Photo by: Reuters
PERTH (miningweekly.com) – The resources rumour mill proved true on Monday after metals miner Independence Group and nickel developer Sirius Resources announced merger plans, that valued Sirius at around A$1.8-billion.
In exchange for their shares, Sirius shareholders would be issued with 0.66 Independence share for every one Sirius share held, along with a cash consideration of 52c a share.
The acquisition valued Sirius shares at around A$4.38c each, and was a 35% premium to the company’s closing price, and a 46% premium to its one-month volume-weighted average price.
In addition to the share and cash transaction, Sirius would also undertake a demerger of its Polar Bear and Scandinavian exploration assets, which include the recently discovered Baloo gold deposit, through a demerger scheme of arrangement.
The newly listed vehicle, called S2 Resources, would be led by Sirius founding MD Mark Bennett, be listed separately on the ASX and would have some A$22-million in cash upon listing.
Sirius shareholders would be issued with one share in the newly merged entity for every 2.5 Sirius shares held.
Sirius and Independence said in a joint statement on Monday that the merger transaction would create a leading diversified Australian mining company with a strong portfolio of high-margin, long-life mining assets, across a range of base and precious metals.
“The proximity of the Sirius and Independence assets in Western Australia creates opportunities to realise synergies and cost efficiencies across a dominant land holding position. This transaction is significantly value accretive for Independence shareholders,” Independence MD Peter Bradford said.
The combined entity would have a market capitalisation of some A$2.7-billion, making it a leading ASX-listed mining company.
Bennett told shareholders that the transaction provided a “great outcome” for the company.
“The board and management of Sirius have full confidence in the ability of Bradford and the Independence team to drive the combined company’s projects forward and create significant value for shareholders. The combination of the Sirius development and Independence operational teams, together with their joint exploration experience, will be unrivalled.”
Following the merger, Bennett and Neil Warburton would join the current Independence board.
Sirius has advised shareholders to approve the transaction, which would be put to a vote in late July.