News: Intrepid Mines and Blackthorn Resources to merge

Intrepid Mines (ASX:IAU) and Blackthorn Resources (ASX:BTR) should both trade higher today after announcing a scrip merger by way of a Scheme of Arrangement.

Intrepid is to buy back up to $110 million worth of Intrepid shares at $0.30 prior to implementation of the merger, in which Blackthorn shareholders will receive 1.078 Intrepid shares for each Blackthorn share held.

This exchange ratio allows Blackthorn shareholders to receive scrip consideration with cash backed value of $0.356 per share, which implies a premium of 34% to the last closing price and 82% to the three month VWAP of Blackthorn shares.

Intrepid and Blackthorn shareholders will then own around 52% and 48% of the merged group respectively, with a pro-forma cash balance of $80 million.

The board will consist of three members from each company, and has the unanimous support of both Blackthorn and Intrepid management.
 
The transaction will see the entity fully funded to complete the DFS for Blackthorn's Kitumba Copper Project, and well positioned to pursue attractive high impact exploration opportunities.

Intrepid shareholders will see capital returned at an 18% premium to its last share price as well participation in the development of a significant copper project.

In 2013, Blackthorn released a maiden underground Ore Reserve of 541,000 tonnes of copper for the Kitumba deposit at its wholly-owned Mumbwa Project in Zambia.

Alternately, Intrepid in April this year received around $90 million in cash for the settlement of disputes surrounding the ownership of the Tujuh Bukit copper-gold-silver porphyry project in Indonesia.

That transaction brought relinquished Intrepid's rights to the asset and increased its total bank balance to almost $90 million.

So the merger seems a perfect marriage of Blackthorn's world class Kitumba copper deposit and Intrepid's world class balance sheet, and demonstrates a willingness by mid-capped resource players to expend substantial funds on quality assets.

This is another sign of recovery in the minerals sector, along with rising commodity and equity prices.

 

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