The offer of C$6.20 per share was pitched at a 50 percent premium to Arizona's last close and implies a total equity value for Arizona Mining of $1.6 billion, South32 said in a statement. The Australian firm already holds a 17 percent stake in Arizona.
The directors of Arizona Mining, which owns the Hermosa Project in Arizona near the border with Mexico, unanimously recommended that shareholders vote in favor of the transaction, South32 said.
South32 chief executive Graham Kerr said the company has actively participated in the Hermosa Project and has a deep understanding of the high grade resource and surrounding area which has similar geology to its Australian Cannington mine.
The large premium suggested South32 is eager to close the deal straight away, said analyst David Lennox of Sydney based advisor Fat Prophets.
"There is an association there, they know the asset suite, South 32 has got the capacity to do it," he said.
"We've seen a bit of weakness in commodity prices with the (U.S.) tariff issues and the strong dollar, so step in and make the offer now," he added.
South32 said it expects to complete the transaction in the September quarter. The deal is subject to shareholder approval.
The Hermosa Project comprises the zinc-lead-silver Taylor deposit and the zinc-manganese-silver Central deposit.
(Reporting by Melanie Burton and Susan Mathew in Bengaluru; editing by Richard Pullin)
