Padbury Mining (ASX: PDY) main focus is targeting iron ore and has a JORC Inferred Resource of 850 million tonnes at 27.3% iron at the Telecom Hill Deposit, which is located at the company's Peak Hill Iron Project Joint Venture.
Telecom Hill is located in the Mid-West region of Western Australia which has grown in stature as a significant iron ore province.
Padbury Mining, Aurium Resources merger to simplify Peak Hill Iron project development
The merger of Padbury Mining and Aurium Resources will combine Padbury’s 70% interest and Aurium’s 30% interest in the Peak Hill Iron project into the one company, simplifying project development.
Padbury Mining (ASX: PDY) and Aurium Resources (ASX: AGU) have today signed a binding Scheme Implementation Agreement, marking the completion of merger negotiations.
The agreement will result in Padbury acquiring Aurium, combining Padbury’s 70% interest and Aurium’s 30% interest in the Peak Hill Iron project into the one Padbury vehicle.
Padbury Mining managing director Gary Stokes said full ownership of the Peak Hill project would strengthen the company and add value for shareholders.
“This merger represents a great transaction for both shareholder groups. I am looking forward to taking Padbury and our flagship project forward as we work towards Pre-Feasibility and the growth of our company,” he said.
Aurium Resources managing director Terry Quinn said another key benefit from the merger was the simplification of the Peak Hill project development.
“As well as increasing the scale of Padbury, this agreement will make project development much less complex, particularly in dealings with potential investors, financiers and offtake partners,” he said.
The Peak Hill Project has an exploration target of 3.5 to 5 billion tonnes at 25% to 35% iron covering an extensive 2,500 square kilometres, and is prospective for magnetite and hematite iron ore.
The current Inferred JORC Resource is 850 million tonnes at 27.3% iron, which was defined from less than a half of the 10 kilometre strike length – indicating a strong chance of a resource upgrade in the near future.
Padbury and Aurium recently recommenced diamond core drilling at the Telecom Hill prospect to further substantiate the Inferred Resource.
Telecom Hill has a direct shipping ore (DSO) exploration target of 10 to 55 million tonnes at 55% to 58% iron.
The JV partners began maiden drilling at the Mt Padbury Prospect in early December and were scheduled to recommence reverse circulation drill testing of potential DSO material in late January.
An exploration target of 20-28 million tonnes at 55-60% iron has been defined for the Mt Padbury Prospect.
Grades of up to 63.2% iron have been achieved from surface rock chip samples, supporting the case for DSO mineralisation.
Importantly, DSO offers the opportunity for early cashflow and would support the development of the company’s Telecom Hill magnetite resource.
Terms of the deal
In mid-November last year Padbury announced it had entered into formal, good faith negotiations on a possible merger with Aurium Resources.
Under the agreement, Aurium shareholders will receive three Padbury shares for every one Aurium share they hold.
The offer represents a premium of about 42.8% to Aurium shareholders, based on the last trading price prior to the announcement, and a premium of 47.4% based on the 30-day volume weighted average price of Aurium and Padbury’s ordinary shares.
Holders of Aurium partly paid shares will receive one Padbury share for every 2.5 Aurium partly paid shares they hold.
Aurium listed option holders will receive one Padbury option, exercisable at $0.02 on or before 30 June 2014, for each Aurium listed option held.
Board Appointments
Gary Stokes will remain managing director of Padbury, while Terry Quinn will be appointed executive chairman of Padbury and William Han will remain a non-executive director.
