MOD Resources, the Sydney-listed company developing the T3 project in Botswana’s emerging Kalahari copperbelt, today threw its weight behind an improved takeover offer from compatriot, Sandfire Resources which will pay A$167m for the company.
In January, Sandfire’s tested the waters with MOD making a preliminary A$0.38 per MOD share offer. At the time, this represented a 73% premium to MOD’s share price, but today’s offer value MOD shares at A$0.45/share and includes a cash element to boot.
Julian Hanna, MD of MOD Resources, described the offer as “a partnership” which would provide his company’s shareholders with exposure to Sandfire’s portfolio of assets whilst the financing of T3, scoped at a capital cost of $183m, would be cheaper.
The acquisition of MOD adds the near-term T3 Project in Botswana to our global development pipeline while also adding a significant landholding on the highly prospective and under-explored Kalahari copper belt,” said Karl Simich, MD and CEO of Sandfire.
“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.”
MOD Resources said in April that in its feasibility study, it found T3 could produce 27,000 tonnes a year of copper, peaking at 30,000 tonnes/year. “T3 is a large, open-pit mine which is a great way to start up production,” said Hanna, adding that there was potential for an underground development on the property.
In addition to the board’s approval for Sandfire’s offer, which takes care of just over 7% of the shareholder base, Metal Tiger has also agreed to the takeover terms. Metal Tiger has 10.48% in MOD Resources, but it will be able to vote 19.9% of total shares after exercising options in the company prior to the scheme meeting. In return, Sandfire has agreed to buy a 30% indirect interest in Metal Tiger’s exploration prospects.
Botswana is known for its diamond industry, but the southern African government has long made known its intentions to diversify its economy.
In February, Khoemacau Copper Mining, a subsidiary of US-based, Cupric Canyon Capital, said it had secured $565m in debt as well as royalty funding for construction of a mine that is scoped to produce some 3.6 million tonnes of copper in its first phase from 2021. This development also included smelting facilities.
