PERTH (miningweekly.com) – Gold- and copper-focused AIC Mines on Monday announced a A$36-million takeover offer for fellow listed Demetallica.

Under the terms of the offer, AIC will offer Demetallica shareholders one of its own shares for every 1.5 Demetallica shares held, valuing the company at 33.7c a share, or at A$36-million.

Upon AIC Mines acquiring all of the Demetallica shares under the offer, AIC Mines will have 384.1-million shares on issue and Demetallica shareholders will own approximately 18.7% of the combined group.

The offer represented a 68% premium to Demetallica’s closing price of 20c a share on September 16, and a 58% premium to its 30-day volume weighted average share price.

Demetallica holds the Chimera project, which is in close proximity to AIC’s own Eloise copper mine, in Queensland, creating an opportunity for numerous synergies, said AIC. The most significant of these is the potential to process ore from the Chimera project at the Eloise processing facility.

“When we acquired the Eloise copper mine in November 2021, we signalled that we could add value through exploration success, resource growth, operational reliability and regional consolidation. We have delivered exploration success and resource growth,” said AIC MD Aaron Colleran.

“We have invested in new equipment and maintenance to improve operational reliability. We are now moving forward with regional consolidation.

“Combining AIC Mines and Demetallica is a logical consolidation. The tenement holdings of the two companies adjoin. The Eloise processing facility is only 4 km from Demetallica’s Jericho deposit. Combining these assets will provide the quickest and most efficient means of developing and mining the Jericho deposit, to the shared benefit of both AIC Mines and Demetallica shareholders.”

Colleran argued that AIC Mines had the underground mining and processing capability, and financing capacity, to rapidly and efficiently develop the copper resources at Demetallica’s Chimera project.

The combination of the Eloise and Jericho projects will result in a combined resource of 240 000 t of copper and 188 100 oz of gold, and increase mine life to more than ten years, and has the potential to increase yearly production to over 20 000 t of copper and 10 000 oz of gold in concentrate, based on the staged expansion of the Eloise processing facility to 1.4-million tonnes a year, a 60% increase on the current production rate.

Economies of scale will also reduce the all-in sustaining costs.

Colleran noted that by receiving AIC Mines shares as offer consideration, Demetallica shareholders will continue to have exposure to the future upside associated with the Jericho copper deposit and Demetallica’s other exploration assets while also participating in the value uplift expected to result from the more efficient development of the copper resources at the Chimera project.

The offer will be conditional on AIC Mines obtaining a relevant interest in at least 50.1% of Demetallica shares and on certain other market standard conditions being fulfilled.

Demetallica has urged shareholders not to take any action around the offer until the company’s directors could make a formal recommendation.