Major copper producer OZ Minerals is willing to pay $444 million to snap up junior player Avanco Resources.

The pair have inked a deal that will see OZ Minerals (ASX:OZL) acquire all the issued shares of Avanco (ASX:AVB) for 8.5c per share cash plus 0.009 OZ Minerals shares per Avanco share.

The deal values Avanco at more than double its current market cap of around $189 million. But for OZ Minerals it is just 16 per cent of its market cap.

Investors applauded the deal, with Avanco’s share price more than doubling to 15.5c on Tuesday.

Avanco has of course told shareholders this morning to accept the offer.

“OZ Minerals’ offer is at a significant premium to recent trading levels and provides an attractive opportunity for Avanco shareholders to both crystallise value today while also maintaining base metals exposure through their holding in OZ Minerals, one of Australia’s leading base metals producers,” Avanco managing director Tony Polglase said.

AVB shares over the past three months.
AVB shares over the past three months.

OZ Minerals, which has a market cap of $2.7 billion, owns and operates the Prominent Hill copper-gold-silver mine and is developing one of Australia’s largest copper-gold resources at Carrapateena.

The prize for OZ Minerals is Avanco’s exploration projects in the highly prospective Carajás copper province and Gurupi gold belt in Brazil.

“Not only does it immediately contribute copper tonnes to our production profile, it offers significant additional new growth options and a meaningful footprint in the highly prospective Carajás province as well as the Gurupi greenstone gold belt in Brazil,” OZ Minerals chief Andrew Cole told investors.

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Avanco shareholders that collectively own 30.62 per cent of the company have indicated they will accept the offer.

The company’s largest shareholder with an 18.45 per cent stake, Appian Natural Resources Fund, has already signed a pre-bid acceptance deed with OZ Minerals.