ASX-listed Blackthorn Resources and Intrepid Mines have signed an agreement to merge by way of a scheme of arrangement.
“The merger will create a well-funded copper company in a strong position to realise the potential of Blackthorn’s Kitumba Copper Project and the broader Mumbwa Project areas in Zambia,” Blackthorn said in a statement.
Details of the merger
Blackthorn shareholders will receive 1.078 Intrepid shares for each Blackthorn share they hold. Cash backed value of A$0.356 per Blackthorn share implies a premium of 34% to the last closing price and 82% to the three month VWAP of Blackthorn shares.
Blackthorn and Intrepid shareholders will own ~48% and 52% of the Merged Group respectively. The Merged Group’s pro-forma cash balance (net of transaction costs) at the time of announcement is ~A$80 million.
Board of the Merged Group to have three directors from Blackthorn and three directors from Intrepid. Ian McMaster will be Chairman of the Merged Group and Mike Oppenheimer will be Deputy Chairman. Mark Mitchell will be CEO of the Merged Group and Scott Lowe will be an Executive Director responsible for business development.
The merger has the unanimous support of Blackthorn and Intrepid Boards. The merger is subject the shareholder approval by both Blackthorn and Intrepid shareholders. Intrepid shareholders will also be given the opportunity to participate in a A$110 share buyback from Intrepid’s cash holdings.
A “compelling opportunity”
“At our AGM last year, we announced that our immediate priorities were to resolve the Perkoa asset underperformance ‘for value’, to reposition our executive team to pursue development of our Zambian copper assets and to enhance our financial capability to do this,” said Blackthorn Resources Chairman, Mike Oppenheimer.
“This Merger represents a compelling opportunity for us to move our business forward aggressively with these priority objectives achieved. The valuation of the Mumbwa assets implicit in the Merger transaction represents an attractive return on funds risked by Blackthorn shareholders on these assets to date. The cash resources of the Merged Group provide a stable platform from which to pursue value accretive growth principally from our existing assets in Zambia, but will also allow us to take advantage of business development opportunities,” he added.
Kitumba Copper Project offers value
Intrepid Mines Chairman, Ian McMaster said: “This transaction follows an intensive review process by Intrepid’s team to identify an undervalued asset, into which our cash could be deployed to create more value for shareholders than simply returning all of it.
“Following an extended process of review and due diligence on numerous assets, our team has determined that the Kitumba Copper Project offers a lot more value than is currently recognised by the market, and we are confident that our cash resources can both add value and unlock this discount over time.