Antofagasta To Purchase Duluth Metals At 284-percent Premium
In a friendly takeover deal, Chile's Antofagasta will purchase all outstanding shares of Duluth Metals at over six times their Friday closing price. Duluth was up 478 percent during Monday trading hours on the news.
In a market where mining companies are finding it difficult to attract interest, Canada's Duluth Metals (TSX:DM) just bagged one sweet deal. The exploration and development company has agreed to be acquired by Chile's Antofagasta (LSE:ANTO) for a comfy 284-percent premium to Duluth's 20-day volume-weighted average share price. By way of a friendly takeover or plan of arrangement, Antofagasta's subsidiary will purchase all outstanding common shares of Duluth for $0.45 per share. As the Canadian Press notes, that's over six times the company's Friday closing price. Total consideration for the offer is approximately C$96 million. Antofagasta has also entered a lock-up agreement with the directors and officers of Duluth and with Wallbridge Mining (TSX:WM), which collectively owns roughly 10.9 percent of the company. Duluth Metals' president and CEO, Kelly Osborne, is certainly positive on the deal, stating, "[w]e are pleased to reach an agreement with our partner Antofagasta and enter into this acquisition transaction. During a difficult period for the mining industry, Duluth has been able to negotiate a significant premium to the current market share price." Twin Metals has big potential Antofagasta currently owns roughly 10.4 percent of Duluth's shares through its subsidiary, and owns a 40-percent interest in Duluth's Twin Metals copper-nickel-PGE Minnesota project through a joint venture agreement. Earlier this year, Antofagasta elected not to increase its ownership in Twin Metals, and there was talk of uncertainty surrounding the project. However, that seems to have been unfounded, as it's clear that Antofagasta is very interested in Twin Metals. Antofagasta's CEO, Diego Hernandez, commented, "[t]he acquisition of Duluth provides Antofagasta with a long-term option to develop a large polymetallic resource in a stable and proven mining region. We believe that the Duluth Complex is an attractive deposit and upon closing of the offer we will commence the process of re-evaluating the project's design while also continuing with the permitting activities."