Photo by: Bloomberg
PERTH (miningweekly.com) – Copper junior Nzuri Copper has received a takeover offer from a subsidiary of Chinese metals trader Chengtun Mining Group, which is offering shareholders 37c a share in cash for their holding in Nzuri.
The directors of Nzuri have urged shareholders to accept the offer, which values the company at about A$109.5-million.
“After many months of negotiations and discussions, we are pleased to have arrived at a point where we can put this cash acquisition proposal from Chengtun in front of our shareholders,” said Nzuri MD Mark Arnesen.
“The directors have carefully considered the benefits and disadvantages of the scheme proposal by Chengtun and concluded that the cash consideration proposed would provide a certain cash outcome for shareholders for their shares at a substantial premium to the historical trading price of Nzuri shares.”
The offer price was a 42% premium to Nzuri’s closing price on February 26, a 93% premium to the company’s 93-day volume-weighted average price, and a 64% premium to its three-month volume-weighted average price.
Arnesen noted that while Nzuri had made great progress towards unlocking a suitable financing solution for its Kalongwe project, in the Democratic Republic of Congo (DRC), along with extensive pre-development activities, the board was of the view that the takeover transaction provided shareholders with an opportunity to crystalise value at a time when new development projects faced considerable funding hurdles.
“Given the all-cash nature of the consideration and the significant premium to the recent trading price of Nzuri shares, directors have recommended that shareholders vote in favour of the proposal in the absence of a superior proposal emerging, and subject to the independent expert concluding the offer is in the best interest of shareholders.”
Nzuri’s main asset is the Kolongwe project, where a feasibility study into the Stage 1 project estimated that it could produce some 18 657 t/y of copper and 1 370 t/y of cobalt, over a mine life of eight years. The project is estimated to require a capital investment of $53.1-million, and would have a net present value of $186-million and an internal rate of return of 99% pre-tax.
Nzuri noted that Chengtun is an existing major player in the Kolwezi region of the DRC, and has recently completed a $150-million solvent extraction and electrowinning processing plant, with a cobalt hydroxide circuit which is scalable, and has been designed to double in capacity.
The takeover offer was subject to a number of conditions, including shareholder and court approvals, and government and regulatory approvals in both Australia and the DRC.
Meanwhile, Nzuri has entered into a A$5-million loan agreement with Chengtun, with the funding to be provided over five tranches. The loan is fully secured and will have an interest rate of 10% a year.