PERTH (miningweekly.com) – ASX-listed Andromeda Metals and fellow listed Minotaur Exploration have announced a merger to create an Australian kaolin/halloysite and technology company, consolidating ownership of the Great White kaolin project, in South Australia.

Under the terms of the agreement struck this week, Andromeda would acquire Minotaur though a unanimously recommended off-market takeover offer, offering 1.15 of its own shares for every one Minotaur share held.

The offer prices Minotaur shares at 20.8c each, representing a 59.8% premium to the company’s last closing price, and a 67.6% premium to its 30-day volume weighted average share price.

Following the transaction, Minotaur shareholders will hold a 19.5% interest in the enlarged Andromeda, with Andromeda expected to have a market capitalisation of A$552-million.

In a joint statement on Wednesday, Andromeda said that the transaction would unlock significant strategic and financial benefits for the company, including increasing its equity interest in the Great White project and Natural Nanotech, simplifying ownership of the Great White project ahead of a definitive feasibility study, enhancing project finance and development alternatives, creating a company with increased scale and market value, and providing an enhanced investment proposition for existing and new shareholders.

For Minotaur, the transaction will allow shareholders to retain exposure to both the Great White and Natural Nanotech operations, while gaining exposure to Andromeda’s broader kaolin projects, as well as its other initiatives.

In addition to the merger agreement, Minotaur also intends to demerge its existing copper and gold exploration assets through its subsidiary, Breakaway Resources, via a pro-rata in specie distribution of Breakaway shares to Minotaur shareholders. The demerger enables Minotaur shareholders to retain full exposure to the value and the potential upside of these assets and the benefit of Minotaur’s highly credentialled board and management team in a clearly focused exploration company which is intended to be listed on the ASX.

“It is an opportune time for Minotaur shareholders to crystalise value for Great White and Natural Nanotech, whilst retaining their exposure to Minotaur’s copper and gold projects,” said MD Andrew Woskett.

“By accepting the offer, Minotaur shareholders will realise immediate value for their stake in the Great White project and maintain exposure to the project, via their new Andromeda shares. In addition, we are excited to be packaging up Minotaur’s base metal and gold assets into subsidiary Breakaway and apply for its listing on the ASX, in which Minotaur shareholders will receive pro-rata shares.

“Breakaway will focus primarily on its gold, copper and base metals projects in Queensland and South Australia, continuing the quality work which has brought discovery recognition,” said Woskett.

Andromeda MD James Marsh told the company’s shareholders that the acquisition of Minotaur and consolidation of the Great White kaolin project represented a significant step towards optimising value for both Andromeda and Minotaur shareholders.

“We view this acquisition and resultant consolidation of Great White and Natural Nanotech ownership as a logical positive next step in the evolution of the project, unlocking value for all Andromeda and Minotaur shareholders.

“Great White is an exciting, low-cost project capable of supplying premium grade refined kaolin minerals into growing market demand for high value bright-white halloysite-kaolin in ceramic/paint sectors and other applications. Consolidating ownership of Great White provides for increased future funding flexibility and development optionality.

“We will welcome Minotaur shareholders to Andromeda’s register and for them to continue to benefit from further progress at Great White as we optimise the project and progress towards production in 2022.”

Andromeda on Wednesday said that good progress has been made on the definitive feasibility study for the Great White project.

A June offtake agreement for major paints and coatings product, and a March premium ceramic product offtake agreement have required the company to make some fundamental changes to the 2020 prefeasibility study parameters, in order to facilitate the proudction of both these offtake products.

While the changes are expected to increase the up-front capital expenditure (capex) requirement, the overall project economics could benefit from several factors, including stronger early cash flows, a multi-phase processing plant development approach, potentially more attractive finance terms, the potential early inclusion of a lower capex direct shipiping ore production component, and a processing plant optimised to produce a diversity of product.

The DFS is expected in the first quarter of 2022.