PERTH (miningweekly.com) – The directors of ASX-listed copper junior Avanco have urged shareholders to accept a A$418-million cash and scrip offer from copper/gold miner Oz Minerals.
Oz Minerals on Tuesday launched its takeover offer of 8.5c in cash and 0.009 shares for every Avanco share held. The offer price valued Avanco shares at 16.8c each, a 118% premium on the company’s last closing price.
Oz Minerals said that the combination of the company’s strong free cash flow generation and balance sheet position, with Avanco’s suite of high-grade, high-growth assets, was compelling.
“Avanco is a good strategic fit for Oz Minerals, diversifying our portfolio and adding to our organic growth pipeline with its development and exploration opportunities in the Carajas province,” said Oz Minerals chairperson Rebecca McGrath.
“Brazil is a stable jurisdiction that is supportive of mining with a reliable mining code. Avanco is a disciplined acquisition representing approximately 16% of Oz Minerals’ market capitalisation.”
Avanco MD Tony Polglase said on Tuesday that the Oz Minerals offer was at a significant premium to recent trading levels, and provided shareholders with an attractive opportunity to crystallise value, while also maintaining base metals exposure through their holdings in Oz Minerals.
“Avanco shareholders will continue to have exposure to Avanco’s exciting asset portfolio in Brazil and Oz Minerals is strongly supportive of the Avanco management team’s Brazilian development strategy. The combination of Oz Minerals’ robust Australian asset portfolio, experienced team and strong balance sheet with Avanco’s largely undeveloped, high-quality Brazilian asset portfolio provides for a promising future for the combined entity and its shareholders,” said Polglase.
Following the transaction, Avanco’s current shareholders will own 7.3% of the combined entity.
The transaction was subject to a number of conditions, including a 50.1% minimum acceptance condition.