Sydney (AFP) – Mining giant BHP’s spin-off South32 is set to buy the remainder of Canada’s Arizona Mining for US$1.3 billion to capitalise on “one of the most exciting base metal projects in the industry”.
South32 — which has aluminium, manganese, silver and selected coal and nickel assets — already owns 17 percent of the Canadian mineral exploration and development firm and is seeking to tap into its Hermosa Project.
The project in Santa Cruz County, Arizona, has deposits of zinc, lead, silver and manganese.
“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,” South32 chief executive Graham Kerr said in a statement.
Shares in South32 fell 2.69 percent to Aus$3.80 (US$2.83) in mid-day trading in Sydney on Monday.
The all-cash offer of Can$6.20 (US$4.70) per share is a 50 percent premium on Arizona Mining’s Friday closing share price, the Australian company said.
Arizona Mining founder and executive chairman Richard Warke said the firm’s board deemed the offer as the “best outcome for all shareholders”.
The deal is contingent on an Arizona Mining shareholder vote in the third-quarter of this year, but is not subject to any regulatory approvals, the two companies said.
Global ratings agency S&P said South32’s ratings remained at BBB+ following the announcement.
“We consider Arizona’s focus on base metals to be in line with the scope of South32’s current portfolio of assets,” S&P said in a statement, adding that the Hermosa Project was a “world-class resource”.