The deal, if approved by shareholders, will give Andromeda 100 per cent ownership of the Great White Kaolin Project on Eyre Peninsula and the technology company Natural Nanotech.
Currently, Minotaur holds a 25 per cent interest in the Great White Kaolin Project and 50 per cent interest in Natural Nanotech, which aims to commercialise applications for the high purity material.
Under the deal, 1.15 new Andromeda shares will be offered for every Minotaur share.
The offer values Minotaur at $0.208 per share, a 59.8 per cent premium on the closing share price on November 8.
Minotaur shareholders will hold almost 20 per cent of shares in the expanded Andromeda.
Minotaur will also separately demerge its copper and gold assets into a subsidiary called Breakaway, which it plans to list on the ASX.
Andromeda Metals lodged its application with the Department for Energy and Mining in February to establish a halloysite-kaolin mine near Poochera on Eyre Peninsula.
Early estimates put the cost of the initial project at $28 million to get it to the point where revenues could begin flowing through the direct shipping of ore.
Andromeda has also foreshadowed the establishment of a wet-processing plant on site in the second year of production at a cost of $56 million to be funded by ore revenues.
Kaolin is a clay used for high-end ceramics. High purity kaolin can also be used for coating applications such as premium paints and inks and fetches up to $1000 a tonne.
However, the Great White project at Poochera, about 640km west of Adelaide by road, also contains significant amounts of halloysite, a rare derivative of kaolin where the mineral occurs as naturally formed nanotubes.
Andromeda last year entered into a 50/50 joint venture with Minotaur to establish Natural Nanotech to investigate new technology applications for halloysite-kaolin nanoparticles in partnership with the University of Newcastle in NSW.
The program incorporates 18 research areas including batteries, carbon capture, the safe storage and transportation of hydrogen, air and water purification and using the nanotubes as controlled delivery mechanisms for medicines, fertilisers and herbicides.
The company is working on a feasibility study for the Great White project, which it aims to finalise early next year before making a final investment decision and potentially commencing production in 2022.
Andromeda managing director James Marsh said the acquisition would unlock significant benefits for shareholders of both companies.
“One hundred per cent ownership of the Great White Kaolin Project will deliver simplified and streamlined ownership and will enable the design, funding mix and timetable for development of the project to be optimised,” he said.
“The offer comes at a strategic time for Andromeda as we have made progress on our Definitive Feasibility Study since securing major paints and coating, and separate ceramics offtake agreements earlier this year.
“It is also a pivotal time for the Natural Nanotech business as we are working to enhance development and commercialisation of future intellectual property in relation to new technology created for halloysite applications such as battery technology, water purification and carbon capture.
Minotaur Managing Director Andrew Woskett said the offer delivered a compelling premium for Minotaur shareholders.
“By accepting the offer, Minotaur shareholders will realise immediate value for their interest in the Great White Kaolin Project and maintain exposure to the project via their new Andromeda shares,” he said.
“We are also excited to be packaging up Minotaur’s base metal and gold assets into a subsidiary entity, Breakaway, and will apply for its listing on the ASX in which Minotaur shareholders will receive pro-rata shares.
“Breakaway will focus on gold, copper and base metal projects in Queensland and South Australia.”
Detailed information relating to the offer and timetable will be dispatched to Minotaur shareholders later this month.
Andromeda Metals was ranked No.26 in InDaily’s 2021 South Australian Business Index of the state’s top 100 companies.
However, its shares fell sharply following yesterday’s announcement to close at $0.165, down more than 15 per cent for the day.
In contrast, Minotaur’s shares jumped 38 per cent to $0.18, their highest level since March.
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