PERTH (miningweekly.com) – The share price of takeover target Macmahon closed 10% higher on Wednesday on revelations of a competing bid.

Macmahon on Wednesday announced that it had signed a nonbinding heads of agreement (HoA) with PT Anmman Mineral Nusa Tenggara (AMNT) outlining key commercial terms under which Macmahon would acquire certain assets from the company.

Under the terms of the HoA, Macmahon and AMNT would enter into a life-of-mine alliance-style mining contract for the Batu Hijau copper-gold project, in Indonesia, with the initial scope of work estimated to have an order book of around $2.7-billion over the life of the operation.

The work could also be extended to include the development of the Elang deposit and the Nangka prospect, which are also controlled by AMNT.

Macmahon will also acquire certain existing equipment from AMNT, including loading equipment, trucks and support assets, with a value of around $150-million. However, this price was subject to variation as an independent valuation has not occurred.

In exchange for the assets, Macmahon will issue AMNT with new shares equivalent to between 40% and 50.1% of the company’s expanded capital, with the number of consideration shares to be determined by dividing the sale assets valuation by an agreed subscription price of 20.3c a share.

The proposed transaction is subject to a number of conditions, including shareholder approval, and no change in control.

The offer being laid before shareholders comes as an alternative to the A$0.145 a share offer made by Cimic, which Macmahon has called “inadequate and opportunistic”.

An independent expert has valued Macmahon shares at between A$0.117 and A$0.203 a share.

Cimic on Wednesday said the Macmahon-AMNT proposal was “rushed” and significantly increased the risk profile of the company.

“Macmahon is asking its shareholders to take the risk, to hope for improved outcomes in the future and back a potential proposal that will dilute existing shareholders without adequate evidence that it can deliver on either of these outcomes,” Cimic said in a statement.

It also pointed to “key concerns” from Macmahon’s recent first-half results, noting that the company’s financial performance had resulted in a statutory loss after tax of A$238.6-million.