Indonesian group to buy Hillside copper project in Australia for $265 million
Hillside represents the largest permitted and shovel-ready copper project in Australia.
Rex Minerals (ASX: RXM), which holds Australia’s largest permitted and shovel-ready copper project, is being bought out by Indonesia-based MACH Metals Australia for A$393 million ($265 million).
Rex shares closed 56% higher at A$0.43 apiece in Sydney Monday on the news. MACH, a unit of the Salim Group and one of Indonesia’s largest conglomerates, already owns a 15.8% stake in Rex, or 121.5 million shares. It will acquire the remainder of Rex shares for A$0.47 each, a 98% premium over the 90-day average trading price. Rex had a market capitalization at the close Monday of A$330.2 million ($222.5 million).
The Rex board unanimously recommends shareholders vote for the deal.
“The transaction provides certainty of value, as well as the opportunity for Rex shareholders to realize their investment at a 10-year historical share price high,” Rex chief executive officer Richard Laufmann said in a statement.
Global funding search
The offer follows a competitive global search for partners to fund and develop the Hillside copper-gold project in South Australia, located 12 km south of Ardrossan. A 2022 resource estimate shows 337 million tonnes grading 0.56% copper and 0.14 gram gold per tonne for 1.9 million tonnes copper and 1.5 million oz. of gold, across all ore types and categories.
BHP’s (LSE: BHP; NYSE: BHP; ASX: BHP) recent, albeit unsuccessful, $49 billion bid to acquire Anglo American (LSE: AAL) was motivated by the strategic need to secure copper mines. BHP is ramping up its copper production in South Australia following its A$9.6 billion acquisition of Australian copper producer Oz Minerals and its mining assets.
The International Energy Agency projects that copper demand will increase to 36.4 million tonnes by 2040 from 25.9 million tonnes last year, driven by its growing application in clean technology and electric grid expansion. However, analysts have warned for years that copper prices aren’t high enough to support new builds.
The Hillside project, with a 13-year mine plan, requires a pre-production capital outlay of A$854 million, according to a 2022 feasibility study.
MACH says it has been looking to diversify its asset base into copper to better capitalize on the energy transition process.
“We remain committed to advancing the excellent work undertaken by Rex on the Yorke Peninsula, including supporting the local workforce and the broader community throughout the ownership transition,” managing director Ferdian Purnamasidi said in a separate statement Monday.
The transaction needs approval from the Australian Foreign Investment Review Board and Rex shareholders. The deal should close by late October, with Rex shareholders voting on it earlier that month.