FTSE 250 copper miner KAZ Minerals (KAZ) has agreed terms on a take-private offer from a consortium led by its chairman, in an all-cash deal that values the firm at around £3 billion.
Nova Resources, a company owned by KAZ chairman Oleg Novachuk and director Vladimir Kim, will pay 640p per KAZ share, representing a 12.1% premium to the closing price of 570.8p a share yesterday.
Shares in the company traded 9.5% higher this morning to 625p following the news.
KAZ said members of its independent committee intended unanimously to recommend that shareholders vote in favour of the takeover at a meeting to be held in December or early January. The acquisition is currently expected to become effective in the first half of 2021.
The members of the Nova Resources consortium had concluded that KAZ Minerals’ long term development of its huge Baimskaya project would be best undertaken away from public markets as a private company.
BAIMSKAYA – HIGH RISK, HIGH REWARD
Shares in KAZ haven’t recovered since a big selloff in 2018 when the company surprised shareholders after spending $900 million to acquire Baimskaya, a massive copper deposit in far eastern Russia. The development of the mine is set to cost $7 billion and take seven years to complete.
A potentially lucrative but high risk project, the Baimskaya copper deposit sits in an area so remote that 250km of roads need to be built just to connect the mine to an existing road, which is then 100km away from the nearest town.
The benefits are obvious, with the project being one of the largest undeveloped copper deposits in the world, while copper demand is forecast to soar in the next few years, underpinned by the growth of renewable energy and electric vehicles.
But for the past two years the market has had little confidence in KAZ, with its shares halving to £5 after announcing the deal in August 2018, albeit also weighed down by continuing copper price weakness, and barely staging any recovery since.
Novachuk said, ‘Mr. Kim and I believe that KAZ Minerals has made notable progress as a public company since listing on the London Stock Exchange in 2005.
‘However, driven by the current market uncertainty and the corporate circumstances of sequential development projects, we believe that KAZ Minerals’ long term interests would be best served as a private company.’