MOD Resources raises $10m, rejects Sandfire’s indicative takeover offer
MOD Resources has rebuffed Sandfire Resources’ proposed takeover bid, but is prepared to continue talks with the mid-tier company.
Following the completion of a $10 million raising, MOD Resources (ASX: MOD) has hit back at Sandfire Resources’ (ASX: SFR) takeover intentions, believing the tilt “significantly undervalues” the assets of the company.
Responding to media speculation, the takeover target confirmed it had received an unsolicited, non-binding and conditional proposal from Sandfire which was made on the basis of $0.38 per MOD share.
Following the offer, MOD said the board believed the proposal undervalued MOD’s unique and extensive assets.
“The unsolicited, indicative proposal for 100% of the company received from Sandfire confirms the potential of the T3 copper project, however the board considers it significantly undervalues the assets of the company,” MOD Resources Managing Director Julian Hanna said.
MOD’s response to the Sandfire bid comes as it completed a $10 million raising through an institutional share placement. An additional $5 million fully underwritten rights issue will be offered to existing shareholders.
The $0.30 per share placement issue price represents a 36% premium to the company’s last closing share price on the ASX. The rights issue, however, will be priced at $0.24 per share.
Most of the funds will be put towards advancing MOD’s T3 copper project in Botswana towards production and defining additional resources within the project area.
In addition, the funds will enable MOD to progress funding negotiations with several parties regarding project development.
With the raising complete, Mr Hanna expressed confidence in the company’s ability to fund its own way at the T3 copper-silver deposit.
“With strong ongoing support of our shareholders through a placement and a fully underwritten rights issue, we believe that the company will have sufficient working capital to achieve our objectives,” he said.
All options on the table
While the company expressed its dissatisfaction with the initial offer from Sandfire, MOD said it would continue to explore all options, including further engagement with the mid-tier miner.
“The company is willing to engage with Sandfire and grant confirmatory due diligence if a compelling price is presented and capable of being supported by the board and MOD shareholders,” the company said.
Sandfire’s tilt at MOD follows on from a recent period of technical due diligence, including access to a data room and a site visit.
A feasibility study for MOD’s fully-owned T3 copper project is on track for completion at the end of March. This will be followed by a decision to mine in mid-2019.
Located in the Kalahari Copper Belt, the proposed development could produce 23,000 tonnes of copper and 690,000 ounces of silver in concentrate.
Sandfire’s interest in MOD and its flagship Botswana copper project comes as the company explores near and medium-term production growth options beyond its DeGrussa copper-gold mine in Western Australia.
Shares in MOD jumped 56.8% to $0.345.