THE BOURSE WHISPERER: Minotaur Exploration (ASX: MEP) has lodged a Bidder’s Statement with the ASX and ASIC in relation to its takeover offer for Breakaway Resources (ASX: BRW).
Minotaur is offering to exchange one Minotaur share for every ten Breakaway shares.
Minotaur Exploration chairman Derek Carter said the Breakaway Board had publicly endorsed his company’s offer and unanimously recommended all its shareholders accept, in the absence of a superior proposal being received.
“It is worthwhile noting that Breakaway’s largest shareholder, Norilsk Nickel Australia – with 24.8 per cent of Breakaway, has committed to accept within five business days after the commencement of the offer period, for 19.9 per cent of its shareholding, in the absence of a superior proposal emerging,” Carter said in Minotaur’s ASX announcement.
“We believe Norilsk’s early acceptance provides a strong indication that our offer is compelling and attractive to all Breakaway shareholders.”
Minotaur explained its offer represents a premium of 33 per cent to Breakaway’s weighted average 30 day share price as at 8 July (Breakaway’s last trading day prior to the offer).
The deal will result in Breakaway shareholders representing approximately 29 per cent of Minotaur.
Minotaur said the deal would enable Breakaway shareholders to participate in its growth plans and will provide them with direct exposure to Minotaur’s exploration assets and expertise.
“The directors of both companies agree that consolidating Breakaway’s exploration assets within the Minotaur Group will provide a wider pathway for value creation through systematic and well-funded exploration,” Carter said.
Minotaur claims to have engineered funding arrangement to ensure Breakaway’s key projects continue to receive the attention and investment they deserve.
Minotaur’s and Breakaway’s combined project locations. Source: Company announcement
“Following the proposed acquisition of Breakaway, Minotaur intends to immediately roll-out an initial 12-month exploration campaign on Breakaway’s Leinster and Eloise tenements,” Carter said.
“Minotaur has put in place an innovative investment plan with a third party that will result in significant exploration expenditure into those projects without Minotaur Shareholders being diluted through equity financing.
“The investment plan is subject to Minotaur’s offer to acquire Breakaway being successful.
“The proposed first-year work program has been determined and agreed with our private exploration Alliance partner, ‘GFR’.
“GFR is committed to an initial investment, subject to Minotaur’s offer to acquire Breakaway being successful, of $2.6 million into two new joint ventures that Minotaur and GFR have agreed to implement.”
Minotaur will act as manager and operator of each joint venture and in return for its initial investment GFR will earn a beneficial interest in each tenement package – being: Leinster 15 per cent and Eloise 14 per cent.
GFR will then have the option of increasing its joint venture investment into each project to earn up to 50 per cent beneficial interest in Leinster for a total $3 million over three years and in Eloise for a total $6 million over four years.
Thus, over a timeline of four years GFR may invest a total of $9 million into exploration activity on the two Breakaway projects.