Intrepid's compensation settlement for the loss of its Tujuh Bukit copper-gold project in Indonesia is to underpin a $110 million share buyback, as well as being recycled in to the Kitumba copper project in Zambia through an agreed merger with Kitumba's owner, Blackthorn.
The agreed merger will be way of a scheme of arrangement and serves the dual purpose of finding a replacement project for Intrepid while resolving funding issues for Blackthorn's advancement of Kitumba.
Intrepid's cash position was increased to about $170m after it settled the tenure dispute over Tujuh Bukit for $80m. After a planned $110m share buyback at 30c a share, it would be left holding about $60m in cash.
That gets rolled in to the advancement of Kitumba through a merger in which Blackthorn shareholders are to receive 1.078 Intrepid shares, with a cash backing of 36.5c, for each Blackthorn share.
Intrepid shareholders will own about 52 per cent of the enlarged group, and Blackthorn's 48 per cent.
The new vehicle for Kitumba's advancement will start out with about $80m in cash.
Both boards believed that the combination of Intrepid's cash with Blackthorn's Kitumba project was capable of "delivering superior returns to both sets of shareholders".
Intrepid chairman Ian McMaster said that since the loss of Tujuh Bukit there had been a search to find a compelling new opportunity or to see the cash returned. "This unique transaction structure delivers on that commitment by providing a flexible mechanism for Intrepid shareholders to exit the majority of their investment at a premium to the current share price, as well as get exposure to an exciting copper development asset," he said.
Blackthorn chairman Mike Oppenheimer said the merger would enable the group to access "capital at a premium to its share price".
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