StockMarketWire.com - South32 and Arizona Mining entered an agreement for South32 to acquire the remaining 83% stake in Arizona Mining via a plan of arrangement, representing a fully funded, all cash offer of $1.3bn.

The offer price of C$6.20 per share represents a 50% premium to the closing price on 15 June and implies a total equity value for Arizona Mining of $1.6bn.

Directors and officers of Arizona Mining, who own 34% of the common shares on issue, have entered into voting support agreements and the directors of Arizona Mining entitled to vote, unanimously recommended to their shareholders that they vote in favour of the transaction.

Arizona Mining is the owner of the Hermosa Project, containing the high grade base metals Taylor deposit, the Central zinc, manganese and silver oxide resource and an extensive, highly prospective land package with potential for discovery of polymetallic and copper mineralisation.

The Taylor deposit is a greenfield development project that has a reported resource of 101m short tons (measured and indicated mineral resources) at 10.4% zinc equivalent grade and is open at depth and laterally.

The project is located close to key infrastructure in an attractive mining jurisdiction.

A preliminary economic assessment completed by Arizona Mining in January 2018 indicated that this low cost, long life project has the potential to deliver a very high internal rate of return on investment.

South32 CEO Graham Kerr said: "Our all cash offer for Arizona Mining will allow us to optimise the design and development of one of the most exciting base metal projects in the industry.

"We have been a major shareholder in Arizona Mining since May 2017 and an active participant in the Hermosa project with representation on the operations committee and a nominee on the board of directors.

"Our deep understanding of this high grade resource and surrounding tenement package, and extensive experience at Cannington, makes us the natural owner of this project and ensures we are well positioned to bring it to development, delivering significant value to our shareholders."

Arizona Mining founder Richard Warke said: "South32's all cash offer of C$6.20 per share represents a premium reflective of the truly world class nature of the Hermosa project and allows shareholders to realise immediate value.

"In addition, the transaction is not contingent on financing, which significantly reduces transaction risk.

"Our board of directors and a special committee of three independent members from the board of directors evaluated this offer and determined that it represented the best outcome for all shareholders.

"Importantly, South32 knows the asset well and understands the significance of the strong relationships that we have built in Arizona with all of our stakeholders.

"I wish South32 all the best in developing Hermosa and the Taylor deposit."


At 8:00am: (LON:S32) South32 Limited share price was +4.1p at 215.7p



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