Minotaur Exploration in takeover-JV frenzy

THE BOURSE WHISPERER: Minotaur Exploration (ASX: MEP) woke the market up with a jolt this morning by announcing a proposed takeover of Breakaway Resources (ASX: BRW).

The company then followed up with a further announcement of a round of deals it claims will likely result in around $9 million injected into copper and gold exploration work on Breakaway-owned assets in both Western Australia and Queensland.

The two proposals are Minotaur-led joint ventures under an alliance the company recently announced with a new private equity cornerstone investor.

Minotaur said work could commence on the ground at Leinster in WA and Eloise in Queensland, as early as October.

Minotaur said the two JV deals deliver a ‘triple whammy’ of growth for the company and was in line with its strategy to become a copper-gold and gold play focused on high-potential copper and gold fields in renowned mineralised provinces.

“Minotaur’s exploration team has identified and prioritised drill targets at both the Eloise (copper-gold) and Leinster (gold) projects,” Minotaur Exploration managing director Andrew Woskett said in the company’s announcement to the Australian Securities Exchange.

“We have backed this up with a funding commitment, subject to the Breakaway takeover completing, from our Alliance partner that will deliver the exploration intensity best able to elevate both projects to realisation.”

Under the agreement Minotaur and its Alliance investor will commence a new exploration joint venture over BRW’s Eloise regional tenements.

A second new Minotaur-Alliance joint venture will result in $3 million spent on exploration at BRW’s Leinster regional tenements over 3 years.

This represents the first significant deal between the two since Minotaur and the investor formed the Alliance in June to seek joint venture exploration and acquisition opportunities in gold and copper-gold provinces around Australia.

Minotaur will operate and manage both Alliance joint ventures.

“These new JVs confirm the commercial benefit of the recently formed Alliance and, importantly, also reassure Breakaway shareholders that should Minotaur’s takeover bid for their company be accepted, immediate ‘in-the-ground’ activity will start on drill targets on Breakaway’s tenements,” Woskett said.

“Subject to exploration success, that should result in discovery upside for Breakaway shareholders making the transition into Minotaur through their acceptance of our offer.

“It also provides a mechanism for Minotaur to unlock value through shared risk and reward and substantiates the value proposition for the proposed change of control transaction.”

Minotaur is offering one Minotaur share for every 10 Breakaway shares for a minimum of 90 per cent of Breakaway’s scrip – an offer representing a 33.4 per cent premium to the target company’s volume weighted average share price over the past month.

At full acceptance, Breakaway shareholders will hold 28.7% of the enlarged Minotaur group.

On a 30 June 2013 pro-forma basis Minotaur will have a market capitalisation of around $19 million, cash and listed investments of about $10 million and consolidated ground holdings in Australia totalling 18,347 square kilometres.