INV Metals up 55% on Dundee takeover news
Dundee Precious Metals Inc. [DPM-TSX] on Monday May 31 said it has struck a definitive deal to acquire the shares of INV Metals Inc. [INV-TSX; ILNLF-OTC] it does not already own, pursuant to a court-approved plan of arrangement.
Dundee currently owns 35.3 million shares or 23.5% of the shares outstanding of INV, which owns the Loma Largo gold project in Ecuador.
INV shares rose sharply on the news, jumping 55% or 27 cents to 76 cents on volume of 1.82 million. The shares trade in a 52-week range of $1.11 and 34 cents.
Under the terms of the transaction, each of the issued and outstanding common shares of INV Metals that Dundee does not currently own will be exchanged for 0.0910 of a Dundee common share. The exchange rate implies a consideration of 80 cents per INV Metals common share based on the preceding five-day volume-weighted average price of Dundee on the Toronto Stock Exchange for the period ended May 28, 2021.
This represents a 63% premium to the closing price of INV common shares on the TSX on May 28, 2021.
As a result, the implied value of the transaction on a 100% and fully-diluted basis amounts to $132 million, and $104 million for the portion not owned by Dundee.
Upon completion of the transaction, existing Dundee and INV shareholders will own approximately 94.5% and 5.5% respectively of the pro forma company.
The transaction is backed by strong shareholder support, with management and directors of INV Metals and Iamgold Corp. [IMG-TSX; IAG-NYSE] entering into voting support agreements representing 47% of the outstanding shares of INV.
Dundee went lower Monday, easing 2.8% or $0.25 to $8.56 on volume of 380,240. The shares are currently trading in a 52-week range of $10.73 and $6.70.
Dundee has previously said it is on track to produce between 271,000 and 317,000 ounces of gold plus between 34 million and 39 million pounds of copper from Ada Tepe and Chelopech, Bulgaria, in 2021. The Tsumeb copper complex is expected to produce 200,000-250,000 tonnes of concentrate this year.
Loma Largo is a gold-copper-silver project that Dundee said is well-aligned with its core strengths and adds a high-quality growth asset to its portfolio. It said Loma Largo has the potential to produce an annual average of 200,000 ounces of gold in its first five years of production.
Life-of-mine production is estimated to be approximately 170,000 ounces/year at an attractive all-in sustaining cost, net of by-products of approximately US$630/oz.
Loma Largo also offers a strong reserve base and economic profile with approximately 2.6 million gold equivalent ounces of high-grade mineral reserves. That material is expected to support an initial 12-year mine life. First production is anticipated by the 2024-2025 time line.