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Shares in Rex Minerals surge more than 60%

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2024-07-08

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Shares in Rex Minerals (ASX:RXM) surged more than 60% after it revealed it had found its ideal partner in the shape of its major shareholder, Indonesian-owned MACH Metals Australia.

Under the terms of the offer, MACH will acquire all the shares in Rex that it does not already own for a cash consideration of 47 cents each.

Rex told the ASX on Monday that it had entered into a scheme implementation deed with MACH Metals, which will pay 47 cents a share, a premium of 71% to the last sale.

That saw the shares jump to 44 cents, where they traded for the rest of the session.

The price values Rex at $393 million, or rather its prime asset, the Hillside copper-gold prospect in South Australia.

Rex said in its statement to the ASX that the MACH offer was received following a competitive global partnering process. This process was focused on the $854 million funding and subsequent development pathway for the Hillside prospect.

The reality is that to get the mine into production will cost MACH more than $1.2 billion—the takeover cost and the $854 million estimate, which seems out of date since it was made at the end of 2022. There has been considerable inflation of costs in the mining industry since then.

Hillside is located on the Yorke Peninsula of South Australia. It is planned as a 13-year open-cut operation.

Rex says it contains a mineral resource of 1.9 million tonnes of copper and 1.5 million ounces of gold. Rex says Hillside is one of the largest undeveloped copper-gold prospects in Australia (although there are several in central Western NSW that are giants, such as Alkane and Magmatic Resources prospects, for instance).

Rex said its board had carefully assessed the offer against a range of other alternatives. After taking into account the risks and potential ownership dilution associated with a stand-alone development of Hillside, it decided the MACH offer was the superior option.

As a result, Rex's board unanimously recommends that shareholders support the transaction by voting in favour of it. This is in the absence of a superior proposal and subject to the independent expert's report.

Importantly, it also has to have the approval of the Foreign Investment Review Board.

If approved and developed, Hillside will add to South Australia’s position as the copper-gold (and uranium and silver) capital of Australia, with BHP’s Olympic Dam, Carapateena, and Prominent Hill mines, as well as a prospective resource under Olympic Dam and another nearby at Oak Dam.

Hillgrove Resources is another player with its Kanmantoo copper-gold project and revitalization of an older mine and resources, which is in the Adelaide Hills around 55 kilometers from the city.

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