- 01Austral to acquire Hammer for $80.7m after Larvotto withdraws.
- 02Value: $0.087/sh; 31.1% stake.
- 03Premiums: 70.6% vs close; 26.5% vs VWAP; WC facility up to $6m.
Austral Resources Australia (ASX: AR1) will proceed with a proposed takeover of Hammer Metals (ASX: HMX) after competing suitor Larvotto Resources (ASX: LRV) withdrew its right to submit a counteroffer.
The $80.7 million acquisition represents Austral’s next step in its bid to build the nation’s newest mid-tier copper hub in Queensland, combining complementary resources with processing infrastructure and exploration upside.
Hammer’s board has unanimously recommended that shareholders vote in favour of Austral’s scheme, which was considered to be superior to that offered by Larvotto.
Major Hammer shareholders — who collectively control 141 million shares or 16% of the company — have confirmed they will vote in favour of the takeover.
Scheme Consideration
Austral’s scheme consideration provides Hammer shareholders with a total implied value of $0.087 per Hammer share comprising 1.2903 Austral shares for each Hammer share held.
This includes $0.007 per Hammer share of implied value through a proposed spin-off of Western Australian gold assets currently held in Carnegie Exploration, including the underexplored Bronzewing South, Orelia North, and Mt Sefton projects.
The proposal offers Hammer shareholders a 70.6% premium to the closing price of Hammer shares on 10 June, and a 26.5% premium to the 30-day volume weighted average price up to 7 August.
A total 31.1% interest in the enlarged Austral group allows them to realise the premium while also retaining meaningful exposure to the combined business.
Premium Offer Price
Austral’s bid reflects a premium of 29.4% to the implied offer price of $0.067 per Hammer share under Larvotto’s proposal.
Austral will provide Hammer with an unsecured working capital facility of up to $6m on terms considered to be generally more favourable than the $4m facility offered by Larvotto, with a portion of the funds to be used to repay an outstanding Larvotto loan (including a $550,000 break fee incurred on termination of Larvotto’s proposal) and support Hammer’s ongoing operations through to completion of the acquisition.
Austral chair David Newling said the takeover marked an important step in Austral’s strategy to build a leading Queensland copper company.
“Hammer’s resource base and exploration portfolio are highly complementary to Austral’s existing operations, infrastructure, and development plans—the combination creates a stronger regional platform with potential to unlock significant value through greater scale, infrastructure utilisation, and future resource development,” he said.
“Together, Austral Resources and Hammer will create a stronger platform to pursue our ambition of becoming Australia’s next mid-tier copper powerhouse.”
Higher Headline Value
Hammer chair Russell Davis believes Austral’s proposal would provide a compelling outcome for shareholders.
“The scheme delivers materially higher headline value and provides our shareholders with an expected 31.1% ownership interest in a larger Queensland-focused copper producer, developer and explorer,” he said.
“Austral’s existing oxide production at Mt Kelly, the planned restart of the Rocklands sulphide processing facility, and an ongoing regional consolidation strategy provide an attractive development and production pathway for the combined portfolio."
“The proximity of our Kalman resource to Rocklands creates strong strategic logic and potential for it to become an important long-term source of sulphide feed.”
Get the wire before the market opens.
The ASX small-cap stories that matter, filed before 9am AEST. Curated by the Small Caps desk.