DiscovEx Resources (ASX:DCX) has entered into a bid implementation agreement with Latitude 66 Cobalt setting out the terms it will offer to acquire the company via an off-market takeover.
DiscovEx’s board unanimously recommends the transaction. The company’s largest shareholder, Capricorn Metals (ASX:CMM), has reportedly committed to vote in favour of the transaction.
Under the offer, DiscovEx will offer Latitude 66 shareholders just over 0.8813 shares for every one Latitude share. Up to 125 million shares will also be issued under the proposed offer.
DiscovEx intends to raise up to $4 million via a public offer of 20 million fully paid ordinary shares at $0.20 per share, subject to shareholder approval.
Bell Potter Securities has been retained as lead manager to the public offer. Messrs Heath Hellewell (Non-Executive Chairman), Wellman, and David Morgan (Non-Executive Director) intend to subscribe for $175,000, $35,000, and $10,000, respectively, under the public offer.
The company says the funds raised, together with existing cash reserves of $3.5 million will enable two years of full operations across the projects.
Raising at least $2 million via a public offer is one of the conditions set out as part of the proposed offer. Another condition is a 90% minimum acceptance by Latitude 66 shareholders.
DiscovEx was suspended from quotation on the ASX on 11 March 2024.
The suitor will also move to change its name to Latitude 66 Limited, subject to shareholder approval, upon completion of the takeover.
Latitude 66 Cobalt holds gold and cobalt assets in Finland via its wholly owned subsidiary Latitude 66 Cobalt Oy. According to DiscovEx, Finland is home to the largest gold operation in Europe with the 6.3 million ounce Kittila Mine producing in excess of 200,000 ounces of gold per annum.
Finland also has downstream refining capacity, being the largest refiner of cobalt outside of China, says DiscovEx. The Scandinavian country is also the only cobalt mining country in the European Union, contributing about 1,500 tonnes per annum as by-product from two nickel mines.
Key assets of the touted takeover target include its wholly owned flagship 7.3 million tonne KSB Project in the Kuusamo Schist Belt, as well as regional exploration projects in the prospective Peräpohja and Kainuu Schist Belts and the Central Lapland Greenstone Belt in northern Finland.
DiscovEx Managing Director Toby Wellman says the quality of the projects, people, and funding this transaction will bring will provides a springboard to take the company to the next level.
“The proposed acquisition represents a step change for DCX and provides exposure to an emerging critical minerals demand that is gaining momentum across the globe.
Europe recognises the importance of securing domestic supply chains and with DCX acquiring the second largest undeveloped cobalt mineral resource in the European Union, the company will have exposure to this and the eventual upside this may present.”
Latitude 66 Managing Director Grant Coyle says the company sees value creation potential and feels the combination of assets will “enable a diversified growth strategy”.
Both parties have entered into an unsecured loan facility agreement in which Latitude 66 will provide DiscovEx with a $500,000 facility to assist with transaction costs.
Repayment of the loan facility is due 31 December 2024.
DiscovEx Resources is a gold explorer focused on its portfolio of gold exploration assets in Western Australia.
Write to Adam Drought at Mining.com.au
Images: DiscovEx & Latitude 66
