Australia-based mining company South32 will buy 83 percent of Arizona Mining's shares for $1.3 billion, according to a joint press release issued on Monday.
Both companies have entered into an agreement for South32 to acquire the remaining 83 percent of issued and outstanding shares of Arizona Mining via a plan of arrangement, representing a fully funded, all cash offer, the statement said.
According to the press release, 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 mineralization.
"Our all cash offer for Arizona Mining will allow us to optimize the design and development of one of the most exciting base metal projects in the industry," South32 Chief Executive Officer Graham Kerr said.
"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," he added.
Arizona Mining founder and executive chairman, Richard Warke said South32's all cash offer of C$6.20 ($4.70) per share represented "a premium reflective of the truly world class nature of the Hermosa Project" and allowed shareholders to realize immediate value.
"In addition, the transaction is not contingent on financing, which significantly reduces transaction risk," he added.
The Taylor deposit is a greenfield development project that has a reported resource of 101 million short tons (Measured and Indicated Mineral Resources) at 10.4 percent zinc equivalent grade and is open at depth and laterally.
By Huseyin Erdogan