The West Musgrave camp, in Western Australia.
PERTH (miningweekly.com) – Copper/gold miner Oz Minerals has struck a scheme of arrangement with joint venture partner Cassini Resources that will give it full ownership of the West Musgrave project, in Western Australia.
The two companies on Monday announced that Oz Minerals would acquire all the issued capital of Cassini Resources, based on one Oz Minerals share for every 68.5 Cassini shares held.
In addition, Cassini shareholders would be paid 1c a share in returned capital out of Cassini’s existing cash balance.
The offer implied a value of 16c a Cassini share, which was a 31% premium on the company’s one-day volume weighted average share price on June 19, and a 55% premium to its three-month volume weighted average share price.
Cassini's share price leapt 24% to 16c a share on the ASX on Monday.
Meanwhile, Cassini will undertake an inter-conditional demerger of its Yarawindah Brook and Mount Squire assets into a new company called Caspin Resources, which will apply for a listing on the ASX. The demerger will allow Cassini shareholders to retain full exposure to the value and upside of the other assets.
Oz Minerals and Caspin have also entered into a contingent payment deed, which could see the as-yet unlisted company being paid a further A$20-million if Oz Minerals decided to divest of the West Musgrave asset.
In the first scenario, if Oz Minerals disposed of 30% or more of its interest in the project for A$76-million or more, Caspin would be paid A$10-million, as well as up to a further A$10-million at a rate of 20c for each dollar of value exceeding the implied value.
If a stake of less than 30% were divested of, the contingent consideration would be calculated on a pro-rata basis.
In the second scenario, if Oz Minerals divested of a 30% or more interest of the contained nickel at the West Musgrave project to a strategic partner, Caspin would be paid an amount of A$10-million. If less than a 30% interest in the contained nickel were sold, the contingent consideration would be calculated based on a pro-rata basis.
The contingent consideration is capped at A$20-million.
Oz Minerals CEO Andrew Cole on Monday told shareholders that the acquisition of Cassini, and full ownership of the West Musgrave project was a natural evolution of a strong and effective working relationship.
“We appreciate the quality project Cassini introduced to Oz Minerals and we have valued their input in the project throughout the further scoping study and prefeasibility study (PFS). This acquisition gives Oz Minerals 100% ownership of the project allowing flexibility regarding future funding and development options.
“This is a promising project with strong sustainability credentials both in terms of the copper and nickel to be mined being critical inputs for the renewable economy, and also in relation to its low carbon footprint, with some 80% of power generated through renewable sources including solar and wind.”
A PFS into West Musgrave estimated that the project could have a mine life of about 26 years, producing at an annual rate of 28 000 t of copper and about 22 000 t of nickel in concentrates.
Based on a processing capacity of ten-million tonnes a year, the project is expected to require a capital investment of A$995-million, and will deliver average net cash flows of A$190-million a year.
Cassini CEO Richard Bevan has urged shareholders to accept the offer, saying it was an opportune time to realise value from the West Musgrave project while maintaining exposure to the Yarawindah Brook and Mount Squires assets.
“In accepting the offer, Cassini shareholders are able to realise immediate value for their stake in the West Musgrave project while retaining their exposure to the project via Oz Minerals shares that form part of the consideration.
“In addition, we are excited to be launching a new company, that intends to apply for listing on the ASX, and in which Cassini shareholders will receive pro-rata shares.”
Cassini’s major shareholders, including Tinci Material, have already confirmed their intention to vote in favour of the transaction, in the absence of a superior proposal.