PERTH (miningweekly.com) – The share price of junior Breakaway Resources dropped nearly 15% on Monday on news that the company had signed a binding bid-implementation agreement with fellow-listed Minotaur Exploration.

Under the proposed takeover offer, Breakaway shareholders would receive one Minotaur share for every ten Breakaway shares held. Based on the 30-day volume-weighted average price of Minotaur’s shares, the offer implied a value of A$5.4-million, or 1.24c a share, to Breakaway.

The transaction has been unanimously recommended by the Breakaway board, with the company’s largest shareholder, Norilsk Nickel, having agreed to a prebid acceptance for 19.9% of its holding in the company.

“The transaction provides our shareholders with the opportunity to become part of a large, well funded and highly credential Australian exploration group with a diversified asset base and great upside,” said Breakaway chairperson John Atkins.

He noted that the current challenging market for junior explorers had made it virtually impossible to raise capital, which meant that business combinations offered a more attractive and less dilutive pathway for shareholders.

“Breakaway shareholders will emerge with around 29% of the merged entity, which will have a strong balance sheet, tight capital structure, an excellent asset base and greater critical mass to survive the current tough times.”

Should the takeover prove successful, the enlarged Minotaur would have a market capitalisation of some A$19-million, with a diversified exploration portfolio and a pipeline of emerging resource projects.

Minotaur chairperson Derek Carter said the combination of Breakaway’s asset with Minotaur’s was highly complementary and synergistic, creating a platform to unlock value for both sets of shareholders.

“The transaction will accelerate and enhance our dual focus around copper/gold exploration in the premier Cloncurry–Mount Isa district of North Queensland, and an emerging strategic position in advanced gold projects in the Leinster district of Western Australia.”

The offer was conditional on a 90% minimum acceptance.

Meanwhile, Minotaur on Monday also announced that it had entered into a separate round of deals with two joint venture (JV) partners, which would see the injection of some A$9-million into immediate copper and gold exploration work on Breakaway-owned assets.

The two JV proposals could see work starting at Leinster and at the Eloise deposit in Queensland, as early as October.

Under an exploration agreement between Minotaur and its alliance investor, a new JV would be formed over the Eloise regional tenements, which would see the investor earn a 50% interest in the tenure by spending A$6-million over the next four years.

A second JV alliance would also see the investor earn a 50% interest in the Leinster tenements by spending A$3-million over three years.

“Minotaur’s exploration team has identified and prioritised drill targets at both the Eloise and Leinster projects. We have backed this up with a funding commitment, subject to the Breakaway takeover completing, from our alliance partner that will deliver the exploration intensity best able to elevate both projects to realisation,” said Minotaur MD Andrew Woskett.

Minotaur would operate and manage both JVs.

“We believe that consolidating Breakaway’s assets into the Minotaur group and then funding activity on Breakaway ground through the strategic participation of our alliance investor, represents a good tripartite win for all parties involved,” Woskett added.

Breakaway’s shareholders have proven less enthused with the deal, with the company’s shares trading at a low of A$0.012 a share, from an opening price of A$0.015 a share.