Iron ore producer Fenix Resources (ASX:FEX) has made a play for fellow explorer CZR Resources (ASX:CZR), which is backed by well-known mining personality Mark Creasy.
The pair have entered into a bid implementation agreement under which Fenix will offer 0.85 of its own shares for every CZR share held at an implied value of $0.26 per CZR share, or $61.4 million.
If Fenix acquires 75% of CZR before 21 March 2025, the suitor will increase its offer to 0.98 of its own shares for every CZR share held, which boosts the offer price to $0.30 per share or $70.8 million.
Fenix, which has a market capitalisation of $233.5 million, says the implied value of the base offer represents a 27% premium to the 10-day volume weighted average price of CZR shares, based on the $0.305 closing price of Fenix shares on 24 February.
Prior to news of the offer, CZR traded as low as $0.15 in late January but witnessed a sudden spike in its share price yesterday (24 February) to a high of $0.245, prompting the ASX to issue a ‘please explain’.
In a response to the ASX price query, CZR acknowledged it has been in “incomplete, confidential discussions in relation to a potential takeover bid from Fenix” since 24 December.
While CZR says the initial terms of Fenix’s proposal were not acceptable, directors are now unanimously recommending shareholders accept this latest offer.
Creasy, who is CZR’s largest shareholder, has already indicated he will accept Fenix’s offer.
Fenix says the deal will position the company as a “leading fully integrated, large-scale iron ore producer and logistics provider in Western Australia, with operations spanning across the Pilbara and Mid-West regions”.
To enable the takeover, CZR announced earlier today that it will terminate the sale of its Robe Mesa Iron Ore Project to Miracle Iron Resources.
Fenix executive Chairman John Welborn says the acquisition of CZR, which has a market capitalisation of $50.9 million, will be transformational for the company.
“CZR’s Robe Mesa Iron Ore Project is one of the last independent large-scale high-quality iron ore development assets in the Pilbara,” he says.
“Fenix’s market-leading port, logistics and mining capabilities are ideally suited to rapidly and efficiently advance the Robe Mesa into production and maximise value creation for our combined shareholder group.”
Welborn says Fenix is on track to triple iron ore production during 2025 via the expansion of its Mid-West iron ore mining portfolio and using its integrated mining, logistics, and port infrastructure model.
“The addition of CZR’s assets will expand our portfolio to include interests in projects with mineral resources of approximately 140 million tonnes of iron ore and provide an immediate opportunity to develop large-scale low-cost iron ore production in Western Australia,” Welborn says.
“Robe Mesa provides the opportunity to develop long life iron ore production at a C1 FOB cash cost below $50 per wet metric tonne, as outlined in the CZR Definitive Feasibility Study (DFS), rivalling the major iron ore producers in the region for robust sustainability.”
CZR Managing Director Stefan Murphy says Fenix has the intent, the capability and the balance sheet to deliver the Robe Mesa Iron Ore Project and Ashburton Link as outlined in the company’s DFS.
“I am confident that under Fenix’s leadership Robe Mesa will be successfully developed and operated and in a highly profitable way for shareholders of Fenix and CZR,” Murphy says.
On completion of the takeover, CZR shareholders will own about 23.8% of the larger company.
Fenix has also agreed to provide CZR with a $2.4 million loan to assist with working capital.
Fenix currently owns and operates two producing iron ore mines in the Mid-West region of Western Australia – Iron Ridge and Shine – and has a right to mine the Beebyn-W11 deposit, which is in the final stages of development and expected to start mining this year.
Write to Angela East at Mining.com.au
Images: Fenix Resources
