The South32 Ltd (ASX: S32) share price fell 3% on Monday after announcing the US$1.3 billion acquisition of the rest of the shares of Arizona Mining (TSX: AZ).
South32 was spun out of BHP Billiton Limited (ASX: BHP), South32 boasts of being the world’s largest producer of manganese ore, a top producer of silver and one of the world’s largest ferronickel producers.
Arizona Mining owns the Hermosa Project, which contains zinc, manganese and silver oxide resources.
The project also comes with a land package with potential discovery of polymetallic and copper mineralisation. According to a report done by Arizona Mining, it’s a low-cost, long-life project that could deliver a high internal rate of return on investment.
South32 will be acquiring the other 83% of the company that it does not already own via an all-cash offer of US$1.3 billion. The offer price of $6.20 Canadian Dollars per Arizona Mining share is a 50% premium to the closing price at the end of last week.
The CEO of South32, Graham Kerr, said: “Our all cash offer for Arizona Mining will allow us to optimise the design and development of one of the most exciting base metal projects in the industry.”
South32 hope to close the transaction in the September 2018 quarter. Management will be hoping that this project can revitalise profit as the half-year result
showed that profit was down by 12%.
We are well positioned to bring it to development, delivering significant value to our shareholders. – Kerr
South32 believes this is an opportunity. Want to learn how Warren Buffett identifies opportunities?
Download the free Aussie investing ebook, “What Buffett’s Investing Checklist Can Teach Aussie Investors“ when you join the free Rask Group Investor Club Newsletter. You’ll get insights into the 4 steps Buffett uses to pick his investments.
Click here to join The Rask Group’s Investor Club Newsletter and Download The Ebook!
