15/07/2013 - 15:34

Minotaur buys out Breakaway

15/07/2013 - 15:34

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Minotaur Exploration managing director Andrew Woskett

Minotaur Exploration has announced an agreed takeover offer for Perth-based Breakaway Resources and the establishment of two new joint ventures to fund exploration of Breakaway's tenements.

Minotaur, in alliance with a new private equity partner, will spend $9 million exploring for copper and gold in Breakaway's Eloise copper and gold project in Queensland and its Leinster gold project in Western Australia.

Adelaide-based Minotaur, which announced an alliance with its new private equity investor in June, said its two new joint ventures would provide the funds for exploration to begin as early as October.

Minotaur managing director Andrew Woskett said the two joint venture deals "deliver a triple whammy" of growth for Minotaur.

"Minotaur's exploration team has identified and prioritised drill targets at both the Eloise and Leinster projects. We have backed this up with a funding commitment, subject to the Breakaway takeover completing, from our alliance partner that will deliver the exploration intensity best able to elevate both projects to realisation," he said.

Under an agreement executed today between Minotaur and its private equity partner, a new exploration joint venture over Breakaway's Eloise regional tenements means its partner earn up to 50 per cent interest in the Eloise tenure through spending $6 million on exploration over the next four years.

Under the second joint venture, Minotaur's private equity partner will earn up to 50 per cent interest in Breakaway's Leinster regional tenements through spending $3 million on exploration over three years.

The move is the first significant deal between the two since they formed an alliance in June to seek joint venture exploration and acquisition opportunities in gold and copper-gold provinces around Australia.

Last month, Minotaur and its private equity partner carried out a smaller deal to acquire Breakaway's 14-tenement 160 square kilometre Scotia project, 65km north of Kalgoorlie, for $600,000. That deal is going through final settlement.

Mr Woskett said the tenements were evidently gold prospective and its private equity partner would spend a minimum $900,000 on exploration in the first 12 months to earn its initial 15 per cent interest.

Minotaur announced earlier today that it would offer one Minotaur share for every 10 Breakaway shares for a minimum of 90 per cent of Breakaway's scrip – an offer representing a 33.4 per cent premium to the target company's volume weighted average share price over the past month.

Minotaur said it would remain headquartered in Adelaide, and Breakaway's two staff based in Subiaco would be offered redundancies.

Breakaway chairman John Atkins said the board had unanimously recommended the buyout in the absence of a superior offer.

"This transaction provides our shareholders with the opportunity to become part of a large, well-funded and highly-credentialed Australian exploration group with a diversified asset base and great upside," Mr Atkins said.

"The current challenging market for junior explorers has made it virtually impossible to raise capital, which means that sensible business combinations such as this offer a far more attractive and less dilutive pathway for shareholders.

"Breakaway shareholders will emerge with around 29 per cent of the merged entity, which will have a strong balance sheet, tight capital structure, excellent asset base and greater critical mass to survive the current tough times" he said.

 

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