LONDON, Sept 22 (Reuters) – Kazakhstan-focused copper miner Central Asia Metals said it would buy Bermuda-based Lynx Resources Ltd in a $402.5 million reverse-takeover deal from its owners.
The acquisition would be funded by a mix of debt and cash, Central Asian Metals said on Friday as it announced a 39 percent jump in full-year core profit.
Lynx Resources, which mines zinc and lead, is owned by Bermuda-based fund Orion Co-Investments III L.P. and Swiss PE firm Fusion Capital AG.
CEO Nick Clarke said the main reasons for the purchase was the low cash costs and that zinc and lead prices were forecast to remain strong in the short to medium term.
“All that you can control is the costs, so when you know that the costs are below where metal prices could go, you are going to stay in profit,” Clarke said.
The deal is subject to regulatory approval in Macedonia, among others, and Central Asia Metals expects to have control of the mine from Oct. 1, the company said.
The deal is expected to be both earnings- and cash-flow-per-share-accretive in the first full year, the company said.
Last year, Lynx mine produced 22,515 tonnes of zinc concentrate and 28,955 tonnes of lead concentrate, the statement said.
Clarke said his team had considered about 150 projects over the last three years before finding Lynx mine earlier this year.
The company also said it would change its dividend policy from paying 20 percent of revenue to a payout target range of 30 to 50 percent of free cash flow.
Central Asia Metals raised 137.4 million pounds ($185.71 million) via a share placement on Friday.
Prices of zinc are up about 18 percent while lead have added 23 percent. ($1 = 0.7399 pounds)
(Reporting by Rahul B in Bengaluru and Zandi Shabalala in London; editing by Sunil Nair)