Larvotto buys Hammer Metals to expand copper holding in Queensland

Australian gold-antimony miner Larvotto Resources (ASX: LRV) is expanding its exposure to copper through the acquisition of Hammer Metals (ASX: HMX) to create a district-scale portfolio in Queensland.

Under a binding agreement signed between the companies on Thursday, Larvotto will acquire 100% of Hammer in an all-share transaction, issuing one new share for every 22 Hammer shares acquired.

Based on Larvotto’s closing price on June 5, this gives Hammer’s stock an implied price of A$0.06 apiece, an 18% premium on the previous trading day. The total equity value of Hammer is estimated at A$54 million ($37.8 million).

“This transaction is a highly compelling tactical and strategic fit that significantly strengthens Larvotto’s
position as an emerging Australian critical minerals and precious metals company,” managing director Ron Heeks said in a press release.

Shares of Larvotto Resources, however, fell 15% to A$1.12 at the close on the potential dilution to shareholders. The company trades at a market capitalization of A$581.3 million ($406.3 million). Hammer Metals fell 2% to A$0.05 apiece, for a market capitalization of A$45.5 million ($31.8 million).

Copper district in Queensland

The acquisition, says Larvotto, “materially expands” its existing Queensland copper strategy and landholding with near-production potential.

Hammer’s portfolio covers 3,600 km² of tenure in the Mt Isa district, anchored by the Kalman project and nearby satellite deposits including Overlander, Jubilee and Lakeview. Together, they have a combined JORC resource estimate of 530,000 tonnes in copper equivalent.

These assets are seen as “highly complementary” to Larvotto’s existing copper asset in Queensland, also called Mt Isa. The project covers 900 km² in tenements previously acquired from Minotaur Exploration and Rio Tinto (ASX: RIO) and is accompanied by an option to acquire the historic Blockade copper mine.

“Hammer has assembled one of the most attractive undeveloped copper and critical minerals portfolios
in the Mt Isa district. By combining the Hammer assets with our adjacent Mt Isa project, we are creating
a district-scale copper portfolio with the resource inventory and development optionality to become a
major participant in the region,” Heeks said.

Glencore backing

The acquisition comes at a time when Larvotto is transitioning into a gold-antimony producer with its Hillgrove project in New South Wales, which is anticipated to come online in August. Earlier this week, the company entered a seven-year gold concentrate offtake with Glencore (LON: GLEN).

The transaction forms part of Larvotto’s broader Mt Isa regional copper growth and development strategy after Hillgrove. Following this pathway to production, the company plans to accelerate resource growth and regional drilling across the enlarged Mt Isa tenure and to commence development studies.

To fund these growth initiatives, it has secured a A$15 million investment from Glencore, which is expected to buy shares at an approximate 15% premium (A$1.53 each).

The Glencore equity investment, combined with the cash flow generated from the Hillgrove mine, is expected to provide “a strong foundation to accelerate Larvotto’s next stage of growth,” Heeks said.