Andromeda pitches $108 million takeover offer for Minotaur

Andromeda Metals, which hopes to break ground on a kaolin mine on the Eyre Peninsula next year, has lobbed a $108m takeover bid for its joint venture partner.

Andromeda Metals' Great White Kaolin project.

Junior explorer Andromeda Metals is set to acquire joint venture partner Minotaur Exploration in a $108 million takeover deal.

The off-market offer of 1.15 Andromeda shares for every Minotaur share has the backing of the Minotaur board and values the company at 20.8 cents per share - a 59.8 per cent premium on its last close price of 13 cents on Monday.

The combined entity would have a market capitalisation of about $552 million.

Andromeda and Minotaur are partners in the Great White Kaolin project on South Australia’s Eyre Peninsula, with Minotaur holding a 25 per cent interest.

They are also 50-50 partners in Natural Nanotech, a joint venture company investigating

nanotechnology applications using halloysite kaolin materials sourced from the Great White project.

As part of the takeover deal, Minotaur would demerge its copper and gold assets into subsidiary company Breakaway, which it intends to list on the ASX.

Andromeda managing director James Marsh said single ownership of the Great White project would deliver the “greatest possible shareholder return”.

“One hundred percent ownership of the Great White Kaolin Project will deliver simplified and streamlined ownership and will enable the design, funding mix and timetable for development of the project to be optimised,” he said.

“The offer comes at a strategic time for Andromeda as we have made progress on our definitive feasibility study since securing major paints and coating, and separate ceramics offtake agreements earlier this year.

“It is also a pivotal time for the Natural Nanotech business as we are working to enhance development and commercialisation of future intellectual property in relation to new technology created for halloysite applications such as battery technology, water purification and carbon capture.”

Minotaur managing director Andrew Woskett said the offer delivered a “compelling premium” for the company’s shareholders.

“By accepting the offer, Minotaur shareholders will realise immediate value for their interest in the Great White Kaolin Project and maintain exposure to the project via their new Andromeda shares,” he said.

“We are also excited to be packaging up Minotaur’s base metal and gold assets into a subsidiary entity, Breakaway, and will apply for its listing on the ASX in which Minotaur shareholders will receive pro-rata shares. Breakaway will focus on gold, copper and base metal projects in Queensland and South Australia.”

In a separate announcement to the market on Wednesday, Andromeda said it had decided to delay the release of its definitive feasibility study (DFS) for the Great White project until the first quarter of next year, in part to give it time to assess new opportunities presented by single ownership.

It follows a major offtake agreement secured earlier this year with Chinese commodity trading house Jiangsu Mineral Sources International Trading Co. (MSI), for 70,000 tonnes a year of high-purity kaolin used in paints and coatings.

At the time, Mr Marsh said the five-year contract “really underwrites the business for us”.

Bidder and target statements will be sent to Minotaur shareholders later this month, ahead of the offer period commencing on December 3.

Minotaur shareholder will vote on the demerger proposal on January 20.

Andromeda has engaged Taylor Collison and Minter Ellison as its advisers, while Minotaur is working with Argonaut PCF and Steinepreis Paganin.

Minotaur shares were trading 5.4 cents, or 42.3 per cent, higher at 18.5 cents in morning trade on Wednesday, while Andromeda shares were 2.5 cents, or 12.5 per cent, lower at 17.5 cents.