By James Regan
SYDNEY Aug 28 (Reuters) – Intrepid Mines launched a friendly A$58.6 million ($54.7 million) all-share offer on Thursday for Blackthorn Resources, which plans to build a copper mine in Zambia, and announced a A$110 million share buyback.
Intrepid, which pitched its offer at 1.078 Intrepid shares for each Blackthorn share, has been looking for a new investment after receiving an A$80 million settlement for being ousted from an Indonesian copper project by a local partner.
Intrepid also agreed to buy back up to A$110 million of its shares at A$0.30 a share prior to the merger.
The offer gives Blackthorn stock an implied value of A$0.356 each, a 50 percent premium based on the average price of the two companies’ shares over the past three months.
Blackthorn’s board has recommended shareholders accept, saying Intrepid would inject needed capital to help pay for pre-development work on its Kitumba copper mining project, located 200 km (125 miles) west of Zambia’s capital Lusaka.
It estimates it will cost an initial $680 million to build the mine, which will yield an average 58,000 tonnes of copper a year.
“The Kitumba copper project offers a lot more value than is currently recognised by the market, and we are confident that our cash resources can both add value and unlock this discount over time,” Intrepid Chairman Ian McMaster said.
If the deal proceeds, Intrepid Managing Director Scott Lowe will be named an executive director focusing business development.
Lowe was previously managing director of Blackthorn, prior to the sale of the company’s interest in a zinc mining venture in Burkina Faso to Glencore International Plc .
Intrepid in February signed a series of binding agreements settling a dispute for A$80 million with its former partner, PT Indo Multi Niaga over ownership of the Tujuh Bukit project in Indonesia, regarded as one of the richest undeveloped gold and copper discoveries in the world. (1 US dollar = 1.0714 Australian dollar) (Editing by Richard Pullin)