Sandfire Resources has made a $167 million takeover offer for MOD Resources, just over five months after it made a $94.5 million bid for the junior, with MOD’s board backing the improved offer.
The offer values MOD at 45 cents per share, and comprises a scrip consideration of 0.0664 Sandfire shares for every one MOD share held, or cash consideration of 45 cents per share, which is subject to an aggregate cash cap of $41.6 million.
The offer represents a 45 per cent premium to the previous closing MOD share price of 31 cents per share.
Sandfire and MOD have executed a binding scheme implementation deed.
Sandfire said the new offer had been unanimously recommended by the MOD board, which own approximately 7.02 per cent of MOD shares.
Metal Tiger, MOD’s largest shareholder other than Australian Super, has also agreed to vote in favour of the scheme.
It owns 10.48 per cent of MOD, and the acquisition of MOD’s tenement package across the Kalahari copper belt will also involve Metal Tiger’s 30 per cent indirect interest in several exploration licences.
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.
A definitive feasibility study on T3 completed earlier this year outlined a base case average annual production of around 28,000 tonnes of copper, a mine life of 11.5 years, a capex of $US182 million and a pre-tax net present value of $US368 million.
Sandfire managing director Karl Simich said the acquisition of MOD added the near-term T3 Project in Botswana to its global development pipeline, while also adding a significant landholding on the highly prospective and underexplored Kalahari copper belt.
“The acquisition ticks all of our boxes from an acquisition criteria perspective and is value-accretive based on the T3 asset alone which, importantly can be funded out of cash flow,” he said.
MOD managing director Julian Hanna said the board considered the implementation of a scheme with Sandfire to reflect a compelling value proposition for shareholders, who would benefit from Sandfire’s platform to deliver the T3 Project into production.
“We see this partnership as providing the opportunity to maximise value from T3 which can be funded from Sandfire’s balance sheet and cash flows,” he said.
Shares in MOD and Sandfire are currently in a trading halt as at 12.30pm AEST.