The merger will ôcreate a company with a rare combination of base and precious metals, with interests in copper, zinc, lead, platinum and goldö, the companies explained in an Australian Stock Exchange filing.
CopperCo is engaged in copper production. Its flagship project, the Lady Annie copper project, produces 19,000 tonnes of copper cathode a year which will increase to 25,000 tonnes in the second half of 2008.
Mineral Securities acquires interests in resource projects and mining operations which have a focus on precious and base metals. The company makes investments in listed companies and directly acquires exploration properties, licenses and joint ventures.
For CopperCo, the merger diversifies its production beyond copper into a number of other metals such as gold and platinum, which are on high growth trajectories.
The merger will be effected through a takeover by CopperCo of Mineral Securities. CopperCo has valued the equity of Mineral Securities at A$242 million and, on a firm value basis, Mineral Securities is valued at A$268 million.
Post-merger CopperCo shareholders will own 54% of the merged entity and Mineral Securities shareholders will own 48%.
Mineral Securities currently owns around 19.8% of CopperCo. It will dispose of the shares it holds within a year of completing the merger.
CopperCo is offering shareholders of Mineral Securities 2.2 CopperCo shares for every Mineral Securities shares they own. This implies a value of A$1.43 for each Mineral Securities share and is a premium of 2.1% to the closing price of Mineral Securities on January 25, 2008.
The CopperCo offer is subject to an 80% minimum acceptance threshold and receipt of relevant approvals.
The companies highlighted several advantages relating to the pooling of assets. CopperCoÆs flagship Lady Annie project and the Lady Loretta lead/zinc project, in which Mineral Securities holds 25%, give the merged entity a significant base metals presence in north Queensland.
Mineral Securities also owns: 18% of Platmin, a new player in the platinum sector which is scheduled to start production in early 2009; 28% in Tianshan Goldfields, a listed gold company conducting feasibility studies on gold in northwest China; and 100% of Sappes Gold, a project which is expected to produce 100,000 ounces of gold a year for a four- to five-year period.
The merged entity will also benefit from better access to capital and the ability to pursue further consolidation opportunities in base and precious metals. The companies also highlighted that with a current shortage of skilled personnel, the merger will allow them to pool human resources.
CopperCo is being advised by UBS with Cochrane Lishman providing legal advice. Mineral Securities is being advised by RBC Capital Markets with Franklyn Legal providing legal advice.
CopperCo lost two cents on the Australian Stock Exchange to close at A$0.63 yesterday. Mineral Securities was flat at A$1.40.
¬ Haymarket Media Limited. All rights reserved.
