The $346m Australian base and precious metals producer Aeris Resources is believed to be contemplating a buyout of its listed rival Aurelia Metals.
DataRoom understands that Aeris is in the process of selecting an investment bank to offer mergers and acquisitions advice about a potential play for the company.
Aurelia itself appears to be well aware of its appeal to its competitors and some have even suggested the group itself may be keen to place itself up for sale given that it is perceived to be vastly undervalued by the market, based on where its share price is currently trading.
It is believed that Aurelia selected new defence advisers in recent months to assist with any corporate activity that may arise.
Winning the role was Bank of America, which is working alongside existing adviser Blackpeak Capital.
Blackpeak Capital is run by the highly regarded industrials banker Max Billingham, who has been adviser to companies such as Adelaide Brighton, Fletcher Building and BlueScope Steel during his days working at Credit Suisse.
He has also advised resources companies at the Swiss bank, including Rio Tinto, Woodside and Fortescue Metals.
Bank of America in October apparently worked on a $60m equity raising for Aurelia Metals to fund its $800m Federation Mine development, but the deal never eventuated, and shares drifted lower since the plan for the raise was first afoot.
The company’s share price has drifted lower since, trading at 49c on Tuesday.
The US-based bank, which counts Joe Fayyad as its Australia country head and Karl Rozman as its local resources banking boss, fended off competition from Goldman Sachs and Macquarie Capital in the beauty parade.
It will be interesting to see if Aeris faces competition should it make a decision to vie for Aurelia Metals.
Other logical buyers include Develop, run by the former boss of gold miner Northern Star, 29Metals or EMR Capital.
Another left field contender could be Peel Mining, a $92m base and precious metals exploration company run by former Aurelia Metals boss Jim Simpson.
DataRoom reported on Monday that management departures at Aurelia Metals had some pegging the Australian listed group as the next takeover target in the gold mining space.
The company’s market value was about $160m on Monday but shares in the group have rallied strongly this week, suggesting an interested suitor could already be amassing stock.
Despite its depressed share price, Aurelia’s net present value is about $400m.
Aurelia announced on November 18 that chief executive Dan Clifford was stepping down and that Andrew Graham was the interim boss under the mentorship of director and former St Barbara boss Bob Vassie.
Recently, Martin Cummings was also appointed chief financial officer.
Aurelia, chaired by former Oil Search boss Peter Botten, has three mines in NSW, including The Peak and Hera Mines in the Cobar Basin in western NSW, and the Dargues Mine is in south eastern NSW.
It has The Federation project, a proposed underground gold, zinc, copper and lead mine development, 10km south of its Hera Mine
Aeris owns the Triton copper mining project, also in the Cobar area.
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