Austral proceeds with Hammer takeover to create enlarged Australian copper producer
With a deadline having lapsed for ASX-listed Larvotto Resources to make a superior offer to take over control of ASX-listed Hammer Metals, Hammer has now entered into a binding scheme implementation deed with ASX-listed Austral Resources pursuant to which Austral will acquire 100% of the issued securities in Hammer through a scheme of arrangement.
Concurrently, Hammer’s Western Australian gold assets currently held in a company called Carnegie Exploration, which include the prospective and underexplored Bronzewing South, Orelia North and Mt Sefton gold projects, together with other associated assets, together the “Yandal Assets”, will be demerged through a capital reduction and in-specie share distribution to Hammer shareholders.
The scheme, together with the demerger, represents about $0.087 per Hammer share of about $80.7-million, which marks a premium of 29.4% to the implied offer price of $0.067 apiece having been made by Larvotto.
Hammer shareholders will receive consideration with a total value of $0.087 per Hammer share comprising 1.2903 Austral shares for each Hammer share held and $0.007 per Hammer share of implied value through shares in the spinout company.
In aggregate, Hammer shareholders will own about 31.1% of Austral's share capital, which is a pure-play copper producer in Queensland. Hammer shareholders will also own 100% of Carnegie Exploration or such other entity incorporated for the purposes of undertaking the demerger, or spinout, or the gold assets.
The scheme between Austral and Hammer ultimately creates an enlarged Queensland-focused copper producer, developer and explorer with existing oxide production, planned sulphide processing and substantial regional resource and exploration scale.
Austral and Hammer have also entered into a binding loan agreement for an unsecured facility of up to $6-million to support Hammer through the scheme implementation process.
Hammer's board recommends that shareholders vote in favour of the scheme with Austral, saying it is in the best interests of shareholders.
Hammer chairperson Russell Davis says after careful consideration of the Austral proposal, including its value, strategic rationale and transaction terms, the Hammer board unanimously determined that it constituted a superior proposal to that of Larvotto and believes the Austral scheme provides a compelling outcome for shareholders.
"The Scheme delivers materially higher headline value and provides Hammer shareholders with an
expected 31.1% ownership interest in a larger Queensland-focused copper producer, developer and
explorer. We believe Austral's regional operating capability, processing infrastructure and funding capacity provide a stronger platform to advance Hammer's broader Mt Isa portfolio and unlock value from its substantial resources and exploration portfolio," Davis states.
