Rox accepts $21m offer from Marindi for Reward project stake

JOHANNESBURG (miningweekly.com) – Perth-based Rox Resources has accepted a revised offer from fellow ASX-listed Marindi Metals for its 49% interest in the 58-million-tonne Reward zinc and lead project, in the Northern Territory.

Marindi initially offered $16-million for the interest in the Reward project, but has revised its offer to $21-million, including a cash payment of $8-million, shares worth $4-million, three-year convertible notes with a face value of $5.25-million and a deferred payment of $3.75-million.

Rox has received a number of competing offers for its interest in the project, which is said to contain about 25% of the world’s zinc reserves. The company owns the project, which contains the Teena zinc deposit, in a joint venture (JV) with Teck Australia.

Rox has offered its interest to Teck, as required under the terms of an earn-in and JV agreement.

“If either the Marindi offer successfully completes or Teck pre-empts, Rox will be well funded for the foreseeable future and under the Marindi offer, we will have a substantial investment in a company with a first-class board and management team,” said Rox MD Ian Mulholland.

Marindi on Wednesday described the acquisition as a “company-making” one, saying it complemented its existing land-holding in the McArthur River basin of the Northern Territory and its advanced Newman zinc project in the Pilbara region of Western Australia.

On a regional basis, the area extending from Mount Isa through McArthur river and for 500 km to the north-west is “probably one of the most well-endowed zinc-lead regions on earth”. The Teena resource is not yet closed off and requires further drilling to establish its full extent.

Marindi also holds tenure in the McArthur River basin, at the 100%-owned Yalco project to the north (also in JV with Teck, which is earning 70%) and immediately adjoining the Reward project at the 100%-owned Caranbirini project.

As a result of the transaction, Marindi will become one of the largest land-holders in the McArthur River basin outside of Glencore, which operates the McArthur River mine, with current published resources of 180-million tonnes at 14.6% zinc and lead, located only 8 km from Teena.

Upon the earlier of six years or the finalisation of a positive bankable feasibility study to the company’s satisfaction, and its being suitable to be submitted to a financial institution as the basis for lending funds and capable of supporting a decision to mine in relation to the JV interest, the company will pay Rox an amount of $3.75-million.

Completion is due once a number of standard conditions precedent are met but also includes Teck not exercising its pre-emptive right within 60 days. Following Teck not exercising its right, Rox and Marindi have 90 days to complete the transaction.

A break fee of $300 000 is payable to Marindi if Teck exercises its pre-emptive right.