PERTH (miningweekly.com) – ASX-listed Cyprium Metals has struck a A$60-million deal with fellow-listed Metals X to acquire its copper portfolio, including the Nifty and Maroochydore copper projects, and the Paterson exploration project, all in Western Australia.
Cypriam on Wednesday announced that it had received firm commitments to raise A$90-million under a share placement to professional and sophisticated investors, to fund the acquisition of the Metals X projects.
The placement would consist of some 450-million shares, to be placed at an offer price of 20c each, representing an 18.4% discount to its closing price on February 4, and a 15.2% discount to its five-day volume weighted average share price.
The share placement would be subject to Cyprium shareholder approval.
Cyprium executive director Barry Cahill on Wednesday told shareholders that the acquisition of the Metals X copper portfolio was a transformational transaction for the company.
“We have regularly ranked Nifty at the top of our Australian copper project acquisition target list and are delighted to have secured this as part of our quality suite of copper development projects.
“Nifty and Maroochydore are a perfect fit for the skill set of our management team, who have a track record of creating value and producing copper, as most recently demonstrated with Finders Resources at the Wetar copper project.”
Cahill said that with favourable market fundamentals for copper, the acquisition represented an outstanding opportunity to generate significant value by securing more than 1.1-million tonnes of contained copper at Nifty and Maroochydore, including significant infrastructure, as well as the extensive Paterson exploration joint venture with metals miner Independence Group, in the highly prospective Paterson Province.
“We are excited about the opportunity to execute our simplified development plan, which consists of an openpit mining operation, feeding a heap leach solvent extraction electrowinning processing flowsheet. Cash flows generated are intended to be used towards the development of the Maroochydore and Cyprium's existing Murchison copper/gold projects,” said Cahill.
Metals X in July of last year flagged the sale of its copper assets as the most appropriate course of action to ensure the financial integrity of the company and realise value for shareholders.
Under the terms of the agreement now struck with Cyprium, the buyer would pay a cash component of A$24-million, including a A$1-million deposit already paid, and convertible notes up to the value of A$36-million.
The convertible notes would have a four-year maturity date, and the conversion price would be based on Cyprium’s 20-day volume weighted average share price on completion.
Based on the number of Cyprium shares to be issued on conversion of the convertible notes, Metals X would also receive two free attaching options for every five shares issued.
The transaction was subject to a number of conditions, including Cyprium raising a minimum of A$30-million in its capital raising, as well as shareholder and regulatory approvals.
“The sale of the copper assets reinforces Metals X’s strategy of focusing on the development of its tin portfolio,” said executive director Brett Smith.
“The combination of a cash payment at completion, plus the release of our cash-backed bonds, will provide working capital to Metals X allowing a reduction in debt, while the convertible notes and the free attaching options provide upside exposure to the successful operation of the assets in the future.”