Metals X bids $86m for Aditya Birla

Perth company Metals X has made a surprise takeover offer for embattled copper miner Aditya Birla Minerals, in a bid which values the target at about $86 million.

Metals X said that, after several months of failed attempts to hold merger discussions with Aditya, it chose to put its offer of one Metals X share for every five Aditya shares directly to shareholders.

The offer is equivalent to about 27.4 cents per Aditya share - a 46.9 per cent premium to Aditya’s 30 day volume-weighted average price, and a 19 per cent premium to its three-month VWAP.

Metals X acknowledged Indian company Hindalco Industries, which controls Aditya with a 51 per cent stake in the business, and the importance of its role as Aditya’s long-term copper offtake partner.

Aditya's core asset is the Birla Nifty copper mine in the Great Sandy Desert, following the recent sale of its smaller Mt Gordon copper mine in Queensland.

Aditya last week engaged Moelis Australia Advisory to act as its financial adviser to assist with the sale of Mt Gordon to private mining company Lighthouse Minerals for $56.7 million.

Metals X chief executive Peter Cook said Aditya was an underperforming company and its shareholders had seen substantial loss of wealth over the past few years.

“The Nifty mine is an underperforming asset and continues to be a challenging operation which with appropriate stewardship is capable of being a good mine," he said.

“However, Metals X believes its underground mining experience, technical capability, financial capacity and experience in operating Western Australian mines makes Metals X almost uniquely placed to take on the Nifty challenge.”

The offer is subject to a number of conditions, including 90 per cent backing by Aditya shares.

Boutique advisory firm Xavier Group, run by former Straits Resources boss Milan Jerkovic, is corporate adviser to Metals X, while HopgoodGanim is legal adviser.

It follows news in August that dissident shareholders had voted against all three resolutions at an Aditya shareholder meeting, including a remuneration report and the re-election of chairman Debu Bhattacharya and director Jagadish Chandra Laddha.

Metals X is looking to acquire the Nifty mine as part of its goal of diversifying its portfolio of mining assets, specifically gold, nickel, tin and copper operations.

It recently expanded its portfolio of gold assets after acquiring of RNI’s Grosvenor, Horseshoe and Peak Hill projects for $20.5 million, and Northern Mining’s Georges Reward project at Bulong for $4.5 million.

Aditya shares rose 5.8 per cent on the news, closing at 18 cents each, while Metals X shares closed 0.7 per cent higher to $1.37 each.