21/01/2019 - 14:50

Sandfire seeks $94.5m takeover of MOD

21/01/2019 - 14:50

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Sandfire Resources confirmed today it has approached MOD Resources about a potential takeover, with the target proceeding instead with a $15 million capital raising to support work on its T3 copper project.

Sandfire seeks $94.5m takeover of MOD
Sandfire's flagship project is the DeGrussa gold-copper project.

Sandfire Resources confirmed today it has approached MOD Resources about a potential takeover, with the target proceeding instead with a $15 million capital raising to support work on its T3 copper project.

In a statement to the ASX responding to media speculation about a takeover, Sandfire initially confirmed it had an interest in acquiring MOD.

In a subsequent announcement, Sandfire stated that a potential offer would be priced at 38 cents per share, equating to approximately $94.5 million.

MOD’s market capitalisation prior to today's raising was around $55 million.

Sandfire owns the DeGrussa gold-copper project near Meekatharra, which has been profitable for the company, but the mine’s life is expected to cease by early 2022.

West Perth-based MOD’s primary focus is on the T3 copper project in Botswana at the Kalahari copper belt.

MOD disclosed late today the Sandfire proposal was made after a period of technical due diligence, including access to a data room and a site visit, with respect to a potential joint venture, the potential sale of a partial interest in T3 and a potential market placement to support development of T3.

It said the scrip-based takeover proposal valued MOD’s equity at $113 million on a fully diluted basis.

MOD managing director Julian Hanna said the Sandfire proposal significantly undervalued the assets of the company.

A prefeasibility study on T3 completed last year had a base case average annual production of 23,000 tonnes of copper, a mine life of nine years and a pre-tax net present value of $370 million.

A definitive feasibility study is due to be completed in the first quarter of this year.

The company confirmed late today it has raised $10 million at 30 cents per share via a placement and will proceed with an underwritten $5 million rights issue at 24 cents.

Ashanti Capital is the lead manager and underwriter, and Canaccord Genuity the co-manager.

Blue Ocean Equities provides corporate advice to the company.

MOD has appointed Sternship Advisers and law firm DLA Piper to advise on the Sandfire proposal.

Sandfire shares were down 0.57 per cent to trade at $7.02 each by the close of trade.

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