OZ Minerals announces takeover offer for Avanco Resources

Tuesday, March 27, 2018

By OZ Minerals

(This is an abridged version of the press release. For the full version click here)

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OZ Minerals Limited ("OZ Minerals") today announces that it intends to make an off-market takeover offer to acquire all the shares (the "Offer") of Avanco Resources Limited ("Avanco"), a Brazilian-focused copper/gold mining company. Avanco shareholders will receive A$0.085 cash and 0.009 OZ Minerals shares per Avanco share (the "Offer Consideration").

The acquisition of Avanco would immediately add to OZ Minerals' copper production profile and provides expansion options in the highly prospective Carajás copper province and Gurupi gold belt in Brazil.

The OZ Minerals Board believes the combination of OZ Minerals' strong free cash flow generation and balance sheet position, and Avanco's suite of high grade, high growth assets, is compelling for shareholders of OZ Minerals.

OZ Minerals Chairman, Rebecca McGrath said: "Avanco is a good strategic fit for OZ Minerals, diversifying our

portfolio and adding to our organic growth pipeline with its development and exploration opportunities in the Carajás province. Brazil is a stable jurisdiction that is supportive of mining with a reliable mining code. Avanco is a disciplined acquisition representing approximately 16% of OZ Minerals' market capitalisation."

OZ Minerals Chief Executive Andrew Cole said: "We are excited about acquiring Avanco as it is aligned to our

multi-asset, province-focused growth strategy. Not only does it immediately contribute copper tonnes to our production profile, it offers significant additional new growth options and a meaningful footprint in the highly prospective Carajás province as well as the Gurupi greenstone gold belt in Brazil."

"From our due diligence process, we are confident both companies are culturally aligned. We believe combining Avanco's experienced in-country management team with OZ Minerals' funding capacity and underground technical expertise will accelerate and enhance the growth and development prospects of Avanco's assets. On completion of the transaction, we will undertake a business execution review to hone our pathway to optimizing the portfolio, improving operating costs to position the business in the bottom half of the cost curve, and accelerate growth."

The Offer Consideration values Avanco at A$0.17p.s.5 or A$418 million total equity value6 and represents a

premium of:

• 121% to the Last Close Price of 0.077, being the price of Avanco's shares on ASX at the close of trading on 26 March 2018,

• 119% to Avanco's 1-month VWAP of A$0.078p.s. up to and including 26 March 2018, and

• 104% to Avanco's 3-month VWAP of A$0.083p.s. up to and including 26 March 2018.

OZ Minerals intends to fund the cash component of the Offer Consideration using available cash on balance sheet.

OZ Minerals has elected to offer partial scrip consideration to maintain flexibility in relation to its capital management initiatives as it constructs Carrapateena, progresses the West Musgrave project pre-feasibility study, advances its concurrent exploration programs, and ensures sufficient capacity is retained to pursue further growth options for the benefit of shareholders. If the Offer is successful, Avanco shareholders will own up to 7.3% of the pro forma shares of OZ Minerals.

Key Avanco management personnel have confirmed their intention to accept the Offer (in the absence of a superior proposal) for any new Avanco shares issued upon exercise of their Avanco options.

For further information, please contact:


Tom Dixon

T: +61 8 8229 6628

M: +61 450 541 389



Sharon Lam

T: +61 8 8229 6627

M: +61 438 544 937