A $1.8 billion takeover by the gold, nickel, zinc and copper miner Independence Group of nickel explorer Sirius Resources will create a new big Australian mining company with a place on the ASX100.
The board of Sirius recommended shareholders accept the cash and share offer which values its shares at $4.38 each. Sirius shares jumped 21% to $3.93 on the news.
The merged entity would have a market capitalisation of about $2.7 billion.
Mark Creasy, who holds 34.59% of Sirius, is also backing the deal.
“This transaction brings together the producing assets of Independence and the near production asset of Sirius,” Creasy said. “The combination of current and future cash flows and diversification of commodities will create a substantial producer that will better be able to manage any increase in volatility in capital and commodity markets.”
In terms of market cap, the new company leapfrogs over its nearest rival Oz Minerals, as this chart shows:
Part of the deal will mean Sirius demerging its Polar Bear and Scandinavian exploration assets to a new ASX listed company to be called S2 Resources Ltd and led by Sirius founding managing director, Mark Bennett. He also joins the board of Independence.
Independence will get the Nova-Bollinger nickel-copper project in Western Australia.
Peter Bradford, Independence managing director, says the deal creates a leading diversified Australian mining company.
“The acquisition of Sirius continues our stated strategy of building a diversified mining company with a balanced portfolio of exploration, development and producing assets, focusing on high-margin and long life,” Bradford said.