Central Asia Metals plots £300m takeover of zinc miner

Macedonia mine
Central Asia Metals is buying the Sasa mine in Macedonia Credit: Lynx Resources

Aim-listed Central Asia Metals (CAML) has unveiled a $402m (£296m) takeover of a zinc miner in Macedonia, hailing it as the “perfect next step” to grow its operations.

The company, which operates a copper mine in Kazakstan, is hoping to diversify by acquiring Lynx Resources from Bermuda-based fund Orion Co-Investments III and Swiss firm Fusion Capital.

Lynx operates the underground Sasa zinc-lead mine in the northeast of Macedonia near the Bulgarian border. The mine has an estimated 20 year life.

CAML will fund the deal through a mixture of cash and debt. It will raise $153m by issuing new shares in an accelerated bookbuild today, alongside $187m of debt financing and a $50m equity investment by Orion, which wants to a keep small stake in the business.

zinc mine
The Sasa mine has a 20-year life Credit: Lynx Resources

Because the deal counts as a reverse takeover under Aim rules, CAML’s shares have been suspended at 254p since Sept 4, when it first revealed it was in talks with a third party. Trading will resume on Monday and the deal will go to a shareholder vote at an extraordinary general meeting on October 11.

CAML’s directors, who own 23.5pc of the company, have pledged to vote the deal through.

Nick Clarke, executive chairman, said CAML had been searching for a new mine to buy for at least three years, and had run the rule over “around 150 projects” before settling on Lynx.

“We were looking to acquire something with low operating costs, which will enable us to have a good cash flow margin so we can maintain our dividends,” he said.

“This is the perfect next step. There is no major capital expenditure required other than sustaining capex. It has a workforce in place. It’s a mature mine, a safe mine… it has all criteria we’ve been looking for.”

CAML is hoping to ride the wave of rising zinc prices, which have climbed 22pc this year as supply has narrowed. The metal is used to coat steel to protect it from corrosion.

processing plant
Credit: Lynx Resources

Mr Clarke said CAML had been “a very consistent performer” on Aim, having raised $60m during its listing in 2010 and returning $100m to shareholders since then. He said the company, which has a market capitalisation of $284m, may consider a move to London’s main market in the near future.

Analysts at Numis gave their thumbs-up to the deal. “The transaction serves to diversify CAML’s jurisdictional and commodity exposure and whilst it appears they have paid full price, they have also acquired an asset with good economics and long life,” they said.

CAML’s largest investor prior to the deal was businessman Kenges Rakishev, the son-in-law of Imangali Tasmagambetov, Kazakstan’s former prime minister and current ambassador to Russia.

Alongside the new share placing, CAML announced that Mr Rakishev - a non-executive director of the company - would sell around half of his 19pc stake “in order to release liquidity and manage his broader investment portfolio”. This will make Fidelity CAML’s largest investor, with a 13pc stake.

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