Austral Resources (ASX:AR1) has made a binding takeover offer for fellow Queensland copper play Hammer Metals (ASX: HMX), valuing it at about $80.7 million.

Hammer’s board unanimously judged the Austral proposal a ‘superior proposal’ to rival Larvotto’s scheme, which it had backed in June.

The decision triggered a five-business-day matching right for Larvotto, running until 11:59pm AWST on Monday, 10 August.

Main image: Hammer Metals Kalman ore sorting

During that window, Hammer cannot sign a binding deal with Austral, and Larvotto may lift or match its offer.

The Brisbane-based copper producer offered A$0.087 per Hammer share, structured as a scheme of arrangement.

Hammer shareholders would receive 1.2903 Austral shares per share, worth about A$0.080, plus A$0.007 through a spin-out of Hammer’s Western Australian gold assets.

They would end up owning about 31.1 per cent of the enlarged Austral.

Extras

Austral said the offer sat about 30 per cent above a competing scrip bid from Larvotto Resources (ASX: LRV), and well above Hammer’s recent trading.

The company framed the deal as part of its strategy to consolidate copper assets across North-West Queensland around its Mt Kelly and Rocklands plants.

Austral said Hammer’s Kalman copper-gold deposit, about 60 kilometres from Rocklands, could feed its three-million-tonne-a-year sulphide plant, due to recommission in mid-2027.

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It said the combination would create a pure-play Queensland copper producer, developer and explorer with a possible market value above A$250 million.

Austral, a debt-free producer in the Mt Isa-Cloncurry corridor, said the offer carried no financing or due-diligence conditions.

It still required an independent expert’s endorsement and the approval of Hammer shareholders and the court.

Austral chairman David Newling said the deal brought together “two highly complementary Queensland copper businesses” and a pathway to build “Australia’s next mid-tier copper powerhouse”.

Austral also lifted a working-capital facility offered to Hammer to $6 million, to help repay Larvotto and cover any break fee.

Hammer’s advisers on the contest are Argonaut and Thomsons.

Disclaimer: The author is an Austral Resources shareholder.