OZ Minerals Limited ('OZ Minerals') (ASX: OZL) and Cassini Resources Limited ('Cassini') (ASX: CZI) are pleased to announce the execution of a binding scheme implementation deed ('Acquisition SID') relating to a scheme of arrangement under Part 5.1 of the Corporations Act under which OZ Minerals will, subject to the satisfaction of various conditions, acquire all of the issued and to be issued share capital of Cassini (the 'Acquisition Scheme').
In addition, Cassini and Caspin have entered into a separate scheme implementation deed (the 'Demerger SID') relating to a scheme of arrangement under part 5.1 of the Corporations Act under which Cassini will, subject to the satisfaction of various conditions, demerge its Yarawindah Brook and Mount Squires assets via a pro rata distribution of Caspin shares (the 'Demerger Scheme'), allowing Cassini shareholders to retain full exposure to the value and upside of these assets in a new vehicle which intends to apply for listing on the Australian Securities Exchange ('ASX'), with the listing subject to all necessary regulatory approvals. The Yarawindah Ni-Cu-PGE Project is located in the emerging New Norcia Nickel Province, approximately 40km north of the recent high grade discovery at the Julimar Prospect.
The Acquisition Scheme and Demerger Scheme will be inter-conditional and completed in conjunction with a capital reduction to effect the demerger (the 'Transaction').
The Acquisition Scheme will result in OZ Minerals consolidating 100% ownership of West Musgrave and surrounding tenements including One Tree Hill and Succoth, enhancing optionality regarding the optimal development approach, timing and funding for the West Musgrave project. A Pre-Feasibility Study ('PFS') released in February 2020 showed West Musgrave to be a low cost, long life (26 year), copper-nickel open pit project with a low carbon footprint. The project is located in Western Australia near the borders of South Australia and the Northern Territory.
Management commentary
OZ Minerals Chief Executive Andrew Cole said the acquisition was the natural evolution of a strong and effective working relationship with Cassini which has enabled agreement on the best value path forward for both parties.
'We appreciate the quality project Cassini introduced to OZ Minerals and we have valued their input in the project throughout the Further Scoping Study and Pre-Feasibility Study. This acquisition gives OZ Minerals 100% ownership of the project allowing flexibility regarding future funding and development options.
'This is a promising project with strong sustainability credentials both in terms of the copper and nickel to be mined being critical inputs for the renewable economy and also in relation to its low carbon footprint with some 80% of power generated through renewable sources including solar and wind.
'We are also pleased to welcome Cassini shareholders on to OZ Minerals' register to continue to benefit from further progress at West Musgrave which complements our operations at Prominent Hill and Carrapateena in South Australia and the Carajas hub in Brazil.'
Cassini Chief Executive Richard Bevan said it was an opportune time for Cassini shareholders to realise value for the West Musgrave Project, whilst maintaining their exposure to the Yarawindah Brook and Mount Squires assets.
'In accepting the offer, Cassini shareholders are able to realise immediate value for their stake in the West Musgrave Project whilst retaining their exposure to the Project via the OZ Minerals shares that form part of the consideration. In addition, we are excited to be launching a new company, that intends to apply for listing on the ASX (subject to regulatory approvals), and in which Cassini shareholders will receive pro-rata shares. Caspin will focus on the highly prospective exploration projects at Yarawindah Brook and Mount Squires.'
Upfront Consideration
In addition to shares in Caspin, Cassini shareholders will receive consideration with an implied value3 of A$0.16 per share ('Upfront Consideration'), comprised of: A$0.15 in the form of one new OZL share for every 68.5 CZI shares held and A$0.01 per share cash capital return to be paid out of Cassini's existing cash balance ('Capital Return')
The Upfront Consideration, which excludes the Caspin shares, represents a premium of: 31% to Cassini's 1-day VWAP price of A$0.123 per share, on 19 June 2020; 31% to Cassini's 1-month VWAP of A$0.122 per share, up to and including 19 June 2020 and 55% to Cassini's 3-month VWAP of A$0.103 per share, up to and including 19 June 2020
At the exchange ratio of one new OZL share for every 68.5 CZI shares held, OZL will issue approximately 6.4m new shares (2.0% of its outstanding shares on issue) as consideration to CZI shareholders (an implied enterprise value of A$76 million as at 19 June 2020). An Independent Expert is to be commissioned to form a view on the value of the Caspin shares that Cassini Resources shareholders will also receive and therefore total transaction consideration for Cassini shareholders.
Contingent Consideration
OZ Minerals and Caspin have entered into a deed ('Contingent Payment Deed') which provides for the potential payment by OZ Minerals to Caspin of additional consideration in two potential scenarios. ('Contingent Consideration').
In the first scenario, if OZ Minerals disposes of 30% or more of its interest in the project and the sale price implies a value for 30% of West Musgrave equal to or greater than A$76 million ('Implied Value'), OZ Minerals will pay Caspin Contingent Consideration of A$10 million, plus up to a further A$10 million payable at a rate of A$0.20 for each dollar of value exceeding the Implied Value. If OZ Minerals sells less than a 30% interest, the Contingent Consideration shall be calculated on a pro-rata basis (ie. if 15% is sold, the Contingent Consideration will be 50% of the amount payable for a sale of 30% or more).
In the second scenario, if OZ Minerals sells 30% or more of the contained nickel at West Musgrave to a strategic party4 , it will pay an amount of A$10 million to Caspin. If OZ Minerals sells less than 30% of the contained nickel, the Contingent Consideration shall be calculated based on a pro-rata basis (i.e. if 15% is sold, the Contingent Consideration will be 50% of the A$10 million).
The Contingent Consideration is capped at A$20 million. This will mean the payment will be limited to A$10m if there is a disposal of 30% or more of the contained nickel (and nil disposal of interest in the project), or a payment of up to A$20m in any other case (i.e. disposal of an interest in the project or a combination of both scenarios).
Benefits to Cassini shareholders
Attractive headline offer value and premium received for 30% interest in West Musgrave
Retain exposure to de-risking and future value unlocked from West Musgrave via OZ Minerals scrip consideration and Contingent Consideration
Gain exposure to OZ Minerals' global portfolio of producing and development assets, including potential future dividends
Retain full exposure to Yarawindah Brook and Mount Squires via shares in Caspin
Benefits to OZ Minerals shareholders
Progress to 100% ownership of West Musgrave, providing OZ Minerals with full project development optionality
Simplify and streamline ownership structure of West Musgrave following completion of the PFS
Use of OZ Minerals' scrip as offer consideration preserves strong existing balance sheet and liquidity position
Cassini Board recommendation and shareholder support
The Board of Cassini has unanimously recommended that, in the absence of a superior proposal and subject to the independent expert to be appointed by Cassini opining that the Transaction is in the best interests of Cassini shareholders, all Cassini shareholders vote in favour of the Transaction. The Cassini Board members have confirmed their intention to vote in favour of the Transaction in respect of any Cassini shares they hold or control, representing approximately 4.3 % of Cassini's issued shares.
Major shareholders of Cassini, including Tinci Material, representing a further 13.1 % of Cassini's issued shares, have also confirmed their intention to vote in favour of the Transaction, absent a superior proposal.
Details of the Acquisition Scheme
The Acquisition SID sets out the detailed provisions relating to the implementation of the Acquisition Scheme. Further information in relation to the Acquisition Scheme will be set out in the Acquisition Scheme booklet, currently expected to be released in late August.
The Acquisition Scheme will be subject to customary conditions set out in the SID (a full copy of which is attached to a separate announcement today by Cassini) such as:
Approval being received from the shareholders of Cassini and court approvals in relation to both the Acquisition Scheme and the Demerger Scheme
All necessary regulatory approvals being obtained5
No 'prescribed occurrences' (as defined in the Acquisition SID) occurring in relation to Cassini
No material adverse change occurring in relation to Cassini
The Cassini representations and warranties (as defined in the Acquisition SID) being true and correct in all material respects
The Independent Expert concluding that the Scheme is in the best interest of Cassini shareholders, and not changing that conclusion
Documentation required to effect the demerger of Caspin being duly executed6; Other conditions customary for a public transaction of this nature.
Details of the Demerger Scheme and Caspin
Under the Demerger Scheme, Cassini shareholders are currently anticipated to receive one 1 share in Caspin for every 22 Cassini shares they hold. The capital reduction to effect the Demerger will require Cassini's shareholder approval, and certain other items necessary to prepare Caspin for its application for listing on the ASX may also be put to Cassini shareholders for approval.
Contact:
Richard Bevan
Tel: +61 8 6164 8900
Email: admin@cassiniresources.com.au
OZ MINERALS 