Copper and cobalt explorer Nzuri Copper (ASX: NZC) has today advised shareholders to accept a $109.5 million takeover offer from Shanghai-listed company Chengtun Mining Group.
Nzuri emerged from a trading halt this morning to announce it has entered into a binding scheme implementation deed with the Xuchen International, a subsidiary of the Chinese metals mining and industrial group, proposing that Xuchen will acquire 100% of Nzuri’s share capital by way of a scheme of arrangement.
The offer is for an all-cash consideration of $0.37 per share, which represents a 42% premium to Nzuri’s last closing price and is 93% higher than the last 30 days’ volume weighted average price.
Nzuri’s board considers this an “attractive” offer and have unanimously recommended that shareholders accept the deal.
“The directors have carefully considered the benefits and disadvantages of the scheme proposal by Chengtun and concluded that the cash consideration proposed would provide a certain cash outcome for shareholders for their shares at a substantial premium to the historical trading price of Nzuri shares,” Nzuri managing director Mark Arnesen said.
Kalongwe project funding
Nzuri’s flagship asset is the Kalongwe high-grade oxide copper-cobalt project, located in the Lualaba Province in the Democratic Republic of Congo (DRC).
The project hosts a near-surface JORC resource of 302,000 tonnes of contained copper grading at 2.7% copper and 42,700t of contained cobalt grading at 0.62% cobalt.
The company has been in discussions with a number of parties regarding funding for the project’s construction and said it received the acquisition proposal following extensive talks with Chengtun dating as far back as 2017.
According to Nzuri, Chengtun is a major player in the Kolwezi region of the DRC and have recently completed a major new US$150 million SX-EW processing facility with a cobalt hydroxide circuit, making it a “strategic fit” with the Kalongwe project.
“They are also clearly on an expansion pathway in the district, having recently transacted a small-sized oxide copper-cobalt deposit,” Mr Arnesen said.
“While we have made great recent progress towards unlocking a suitable financing solution for Kalongwe – combined with extensive pre-development activities including an extensive front-end engineering and design and hydro-metallurgical test work program – the Board believes that this transaction provides shareholders with the opportunity to crystallise certain value for their investment at a time when new development projects in the resource sector face considerable funding hurdles and a range of market related and strategic risks,” he added.
Mr Arnesen said given the all-cash nature of the offer and the “significant” premium to Nzuri’s recent trading price, directors recommend that shareholders “vote in favour of the proposal in the absence of a superior proposal emerging and subject to the independent expert concluding the offer is in the best interests of shareholders”.
Nzuri shares surged on the news to sit 23.08% up at $0.32 by early afternoon trade.