Rex Minerals jumps after friendly takeover bid from Indonesia’s Salim group

Shares in South Australian copper play Rex Minerals jumped sharply on Monday after Indonesia’s billionaire Salim family staked a claim in the South Australian copper sector.

Rex Minerals' Hillside copper project on the Yorke Peninsula.

Shares in South Australian copper play Rex Minerals jumped sharply on Monday after Indonesia’s billionaire Salim family staked a claim in the South Australian copper sector through a 47c a share bid that values the company at $393m.

Rex shares closed 15.5c higher at 43c, up 56.4 per cent, after the company said the friendly bid needed only the approval of the Foreign Investment Review Board and shareholders to complete. The company has spent most of the last 15 years looking for a development option for its Hillside copper project on South Australia’s Yorke Peninsula, where mining leases were initially granted as far back as 2014.

But the low grades of the deposit – which average about 0.53 per cent copper – have made it difficult to find a funding solution for Hillside amid volatile prices over the last decade for the industrial metal. The buyout offer from MACH Metals suggests the $854m capital cost of developing Hillside has not deterred the mining group, which is controlled by Indonesia’s Salim family, amid broad predictions of rising copper demand and pricing over the next decade.

The takeover bid comes after Rex ran an 18-month partnering process to find investors prepared to help defray the cost of building the mine, which is tipped to produce 42,000 tonnes of copper and 30,000 ounces of gold a year when it comes into production.

Rex said on Monday the offer was unanimously supported by the company’s board and subject only to limited conditions – including FIRB approval and that an independent expert report finds it is in the best interest of Rex shareholders.

“Management has done a terrific job advancing Hillside to be Australia’s largest fully permitted and shovel ready copper project,” said Rex chairman Ian Smith. “The MACH offer is the culmination of many years of hard work and delivers certain value for shareholders.”

The offer comes with no conditions around due diligence or finance.

MACH took a 15.8 per stake in Rex in January, through a $12m placement at 18.5c. The 47c a share offer is almost double its three month average price of 24c, and a 70 per cent premium to its closing price last Friday.

Salim Group has had a long presence as an investor in the Australian resources sector and is best known on the east coast for its acquisition of the Mount Pleasant coal mine in NSW from Rio Tinto in 2015 for $US180m.

But not all of its Australian investments have been successful, with the group having lost heavily on multiple attempts to restart the historic Windimurra vanadium mine in WA.