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Australia's South32 bids $1.3 billion for rest of Canada's Arizona Mining
June 18, 2018

South32 Ltd, the Australia-based mining firm, has bid $1.3 billion to take full control of Arizona Mining which is developing the Hermosa project, a zinc, lead, manganese and silver asset known as the Taylor deposit in Arizona.

The offer of C$6.20 per share was pitched at a 50 percent premium to Arizona’s last close and implies a total equity value for Arizona Mining of $1.6 billion, South32 said in a statement. The Australian firm already holds a 17 percent stake in Arizona.

Reuters reported that the directors of Arizona Mining, which owns the Hermosa Project in Arizona near the border with Mexico, unanimously recommended that shareholders vote in favor of the transaction, South32 said.

South32 chief executive Graham Kerr said the company has actively participated in the Hermosa Project and has a deep understanding of the high-grade resource and surrounding area which has similar geology to its Australian Cannington Mine.

“Our all cash offer for Arizona Mining will allow us to optimise the design and development of one of the most exciting base metal projects in the industry. We have been a major shareholder in Arizona Mining since May 2017 and an active participant in the Hermosa Project with representation on the operations committee and a nominee on the board of directors. Our deep understanding of this high grade resource and surrounding tenement package, and extensive experience at Cannington, makes us the natural owner of this project and ensures we are well positioned to bring it to development, delivering significant value to our shareholders.”

South32 said it expects to complete the transaction in the September quarter. The deal is subject to shareholder approval.

The Hermosa Project comprises the zinc-lead-silver Taylor deposit and the zinc-manganese-silver Central deposit.

“South32’s all-cash offer of C$6.20 per share represents a premium reflective of the truly world class nature of the Hermosa Project and allows shareholders to realize immediate value. In addition, the transaction is not contingent on financing, which significantly reduces transaction risk,” Arizona Mining founder and executive chairman, Richard Warke said in a statement. “Our board of directors and a special committee of three independent members from the board of directors evaluated this offer and determined that it represented the best outcome for all shareholders. Importantly, South32 knows the asset well and understands the significance of the strong relationships that we have built in Arizona with all of our stakeholders. I wish South32 all the best in developing Hermosa and the Taylor deposit.”
 

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