THE BOURSE WHISPERER: Altona Mining (ASX: AOH) has entered into an agreement for the sale of all of its Finnish operations and most of its exploration assets in Finland.
The buyer is Boliden Mineral AB), a Swedish base metal miner and smelter, which currently buys all of Altona’s concentrate products.
Boliden will pay US$95 million (A$101 million) for the assets together with adjustments for working capital, net debt and net capital expenditure during the settlement period.
Based upon current estimates Altona said the total consideration will be approximately US$100 million in cash (A$106 million).
The transaction is conditional upon a number of criteria, one of which is the approval of Altona shareholders.
A General Meeting is scheduled to be held on or about 14 August 2014.
The transaction is also dependent on the approval of Finnish competition authorities, however Altona said it does not expect this to be withheld given the relatively small volume of its concentrate production relative to the European market size.
Once the deal is done, Alton anticipates to be sitting on a healthy bank balance, somewhere between $120 million and $125 million.
The company indicated it intends to make a cash payment to shareholders of 15 cents per share, which equates to approximately $80 million in total.
Once shareholders approve the transaction and the capital management initiatives are made, Altona anticipates it will retain between $40 million and $45 million in cash, its 100 per cent ownership of the Little Eva project at Cloncurry in Queensland and an interest in the adjacent Chinalco Yunnan Roseby exploration joint venture.
The company outlined its strategy for life after the transaction will be to realise value from the Little Eva project through the pursuit of a strategic partnership or sale of the asset.
It will carry out work to enhance Little Eva through resource definition drilling at the satellite deposits Turkey Creek and Lady Clayre, testing of high-prospectivity targets at Greenhills and Airport, re-optimisation of reserves and other activities.
Altona also hopes to reduce corporate overheads to reflect its reduction in activities and to minimise cash burn.
The company will retain the Hautalampi project near Outokumpu but has granted Boliden an option to either mine the Hautalampi deposit in exchange for payment of a 2 per cent Net Smelter Royalty or to purchase the project outright for US$3 million.
Altona will also retain the Sarkiniemi nickel mine.