19/10/2016 - 10:28

Teck to buy Rox's Reward stake for $20.6m

19/10/2016 - 10:28

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Rox Resources’ joint venture partner Teck Australia has matched a competing bid for the company’s stake in the Reward zinc-lead project in the Northern Territory for up to $20.6 million.

Teck to buy Rox's Reward stake for $20.6m
Exploration work at Rox Resources' Reward zinc-lead project in the Northern Territory.

Rox Resources’ joint venture partner Teck Australia has matched a competing bid for the company’s stake in the Reward zinc-lead project in the Northern Territory for up to $20.6 million.

In a statement today, Rox said Teck had exercised its pre-emptive right under the terms of the joint venture agreement to match Marindi Metals’ offer to acquire the 49 per cent interest in Reward for $21 million in cash and shares.

Under the agreement, Rox was obliged to offer to sell its stake in Reward to Teck if it received a third party offer.

Teck will pay $8 million in cash, plus either $3.6 million in shares or another $2.6 million in cash to acquire the Reward stake, along with a three-year promissory note with a face value of $5.25 million and a deferred $3.75 million payment payable on completion of a bankable feasibility study on Reward.

The total value of the acquisition would come to $19.6 million if Teck chooses to wholly pay in cash.

“Monetising our interest in the Reward project represents a successful outcome for our shareholders,” Rox managing director Ian Mulholland said.

“This shows that the market was significantly undervaluing the project and validates our decision to sell.

“Rox will now review its strategic options with a focus on generating new growth and value opportunities.”

Marindi said in a statement it was seeking legal advice on the validity of Teck’s pre-emptive right to buy the stake.

“Teck’s desire to acquire Rox’s 49 per cent stake in the Reward project is seen as a strong endorsement of both the validity of Marindi’s strategy to acquire the asset and of the outstanding long-term outlook for zinc,” it said.

Marindi’s offer, lodged in August, was already competing with a previous bid put forward by Melbourne-based IM Medical.

Rox shares were 5.8 per cent higher to 1.8 cents each, while Marindi shares fell 8.6 per cent to 2.1 cents each, at 10:30am.

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