Sandfire Resources has made a second acquisition bid for MOD Resources worth $167 million.
The acquisition would mean MOD’s assets would restock Sandfire with resources beyond the mine life of the DeGrussa copper-gold mine in Western Australia.
It would also give Sandfire direct access to MOD’s 11,700-square-kilometre landholding across the Kalahari copper belt in Botswana, southern Africa.
MOD’s portfolio in the Kalahari includes the advanced T3 project, which is valued at $309 million and in a near-term production stage.
T3’s feasibility study outlined copper production of 28,000 tonnes a year from an open pit over an 11.5-year mine life, excluding any underground opportunities that are yet to be assessed.
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This project is scheduled to commence construction in 2020 ahead of first production in 2021.
“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,” Sandfire Managing Director and Chief Executive Karl Simich said.
The MOD board considers Sandfire’s latest bid ($0.45 a share) ‘a compelling value proposition’ for its shareholders, following its rejection of Sandfire’s initial offer ($0.38 a share) in January.
MOD managing director Julian Hanna said the company’s shareholders will benefit from Sandfire’s platform to deliver the T3 project into production, and realise the full potential of the underexplored Kalahari copper belt.
“We see this partnership as providing the opportunity to maximise value from T3, which can be funded from Sandfire’s balance sheet and cash flows,” he said.
“The acquisition will also provide MOD shareholders with exposure to Sandfire’s high-grade copper production in Australia.”