South32 Ltd has entered into an agreement to acquire the remaining 83% of issued and outstanding shares of Arizona Mining via a plan of arrangement, representing a fully funded, all cash offer of $1.3 billion. The offer price of C$6.20 per share represents a 50% premium to the closing price on 15 June and implies a total equity value for Arizona Mining of $1.6 billion1 (C$2.1 billion).

Arizona Mining is the owner of the Hermosa project, containing the high grade base metals Taylor deposit, the Central zinc, manganese and silver oxide resource and an extensive, highly prospective land package with potential for discovery of polymetallic and copper mineralisation. The Taylor deposit is a greenfield development project that has a reported resource of 101 Mt (Measured and Indicated Mineral Resources) at 10.4% ZnEq grade and is open at depth and laterally. The project is located close to key infrastructure in an attractive mining jurisdiction. A PEA completed by Arizona Mining in January 2018 indicated that this low cost, long life project has the potential to deliver a very high Internal Rate of Return on investment.

South32 Chief Executive Officer, 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. We have been a major shareholder in Arizona Mining since May 2017 and an active participant in the Hermosa project with representation on the operations committee and a nominee on the board of directors. Our deep understanding of this high grade resource and surrounding tenement package, and extensive experience at Cannington, makes us the natural owner of this project and ensures we are well positioned to bring it to development, delivering significant value to our shareholders.”

The estimates of the Taylor sulphide Mineral Resources contain 15.2 Mt of Measured Mineral Resource (4.0% Zn, 4.0% Pb & 1.6 g/t Ag) and 85.8 Mt of Indicated Mineral Resource (4.2% Zn, 4.0% Pb & 2.2 g/t Ag).

Arizona Mining founder and Executive Chairman, Richard Warke said: “South32’s all cash offer of C$6.20 per share represents a premium reflective of the truly world class nature of the Hermosa Project and allows shareholders to realise immediate value. In addition, the transaction is not contingent on financing, which significantly reduces transaction risk.”