Copper producer Austral Resources Australia is making a move on Hammer Metals, eyeing the explorer’s North-West Queensland portfolio as a strong future feed source for its Rocklands processing plant near Cloncurry.

Austral said its proposal to acquire 100 per cent of shares in Hammer for about $80.8 million represented a 29.9 per cent premium on the deal Larvotto Resources put on the table last month.

Related: Glencore backs Larvotto in NW Qld copper push

Austral Resources Australia (ASX:AR1) chairman David Newling described the move as yet another forward step in the company’s journey to become Australia’s next mid-tier copper powerhouse.

Hammer’s portfolio – which includes the Kalman, Elaine, Jubilee, Overlander and Lakeview projects – would deliver enhanced scale in the region for Austral, exploration upside and an established resource of 39.2Mt at 0.53 per cent copper from Kalman alone.

Image at top of page: A view of Hammer’s Kalman project site, which lies about 60km from Rocklands by road.

“We believe this proposal represents a compelling and strategically superior outcome for Hammer shareholders,” Mr Newling said.

“It offers a materially higher value proposition than the current Larvotto proposal, while combining two highly complementary Queensland copper businesses to create a larger, more relevant and better-capitalised company.

“Importantly, the transaction brings together Hammer’s high-quality resource base with Austral’s existing processing infrastructure, operational capability and strong balance sheet, creating genuine and immediately actionable synergies that we believe can accelerate development, unlock additional value from assets such as Kalman, and deliver greater long-term benefits for shareholders of both companies.”

Related: Austral on track with Rocklands processing plant revamp

Hammer’s Western Australian gold assets held in Carnegie Exploration are proposed to be demerged via a capital reduction and in-specie share distribution to Hammer shareholders.

Austral has appointed Euroz Hartleys and Shaw and Partners as its joint financial advisers to the transaction. GLG Legal has been appointed as legal adviser.

Hammer Metals (ASX: HMX) said that at this stage the Austral Resources proposal was non-binding and indicative.

However, it has determined that it is a bona fide competing proposal as defined in the scheme implementation deed entered into with Larvotto and could reasonably be expected to become a superior proposal.

‘Accordingly, the Hammer board has determined that the fiduciary exception under the Larvotto SID applies and Hammer intends to engage with Austral in relation to the Austral proposal as well as to facilitate proposed mutual due diligence (subject to execution of a confidentiality agreement),’ the company said in an update to the ASX.