Queensland Mining says yes to Moly’s proposal
Junior copper and gold explorer Queensland Mining has agreed to a $50.8 million cash takeover offer from unlisted Moly Mines.
The move comes after the company was unable to get the sale of its White Range project to Moly across the line.
Investors were happy, with shares up 32 per cent at 16.5c in late morning trade.
The two companies have struck a friendly deal under which Moly will acquire all of the shares in Queensland Mining (ASX:QMN) for 17c per share.
The offer represents a 49.12 per cent premium to the 30-day volume weighted average price of shares at December 14.
Two of Queensland Mining’s major shareholders with a combined 20 per cent stake have already agreed to accept the offer.
Moly has been looking for potential opportunities in the mining sector since mid-2013, when it inked a mine gate sale deal for its Spinifex Ridge iron ore mine in Western Australia’s Pilbara.
The company still owns the Spinifex Ridge molybdenum-copper project, but that has been on care and maintenance since the global financial crisis hit in 2008.
Queensland Mining originally agreed in October to sell its White Range copper and gold project to Moly for $53 million in cash and convertible notes. It had been looking for a partner to help develop the project since 2015. However, the conditions were not satisfied and the sale fell through.
The company has now told shareholders to accept this new deal because it provides the certainty of a cash return and it “crystallises value” for the company’s White Range project, 40km south of Cloncurry, Queensland.
“I strongly believe this current takeover bid is more attractive to our shareholders than the previous offer to purchase the White Range project by Moly,” chairman Dr Lakshman Jayaweera said.
“This takeover bid is much simpler to execute, and assuming that it is successful, will mean payment by Moly direct to QMN shareholders at A$0.17 per share, with a total cash consideration valuing QMN at approximately A$50.8 million.”
Queensland Mining also noted that the offer gives shareholders the option to “avoid the risk and uncertainty relating to QMN’s ability to fund its ongoing operations”.
The company had just under $4 million in cash at the end of the September quarter and an expected cash burn for the December quarter of $650,000 — down from the roughly $1 million spent previously.