CBH Resources yesterday announced a $67.5 million deal with its major shareholder, Toho Zinc that will clear 81% of the company’s total debt.
As part of the agreement, CBH has sold 50% of its Rasp project at Broken Hill for $57.1 million and established a joint venture to develop the mine.
Toho will also purchase all the zinc and lead concentrates produced at the Rasp mine.
The remaining $10 million will be raised through the placement of 50 million shares to Toho at 20 cents each.
The placement will increase the Japanese company’s 23.1% holdings in CBH to between 29.6% and 31.8%.
“This transaction provides the impetus to bring Rasp into production at the earliest opportunity, transforming CBH into a leading zinc and lead producer with cashflow from two producing mines,” the company’s managing director Stephen Dennis said.
The deal also includes an offer from CBH to buy back its convertible notes for $500 cash as well as 1800 shares.
This will remove $98.8 million from the company’s total debts, leaving only $22.6 million outstanding.
Belgian company Nyrstar had made a 100% takeover bid for CBH late last year, offering 13.5 cents a share and 75% of the face value of its convertible notes.
This valued the miner at around $220 million.
However, CBH’s independent directors deemed that the Toho transaction was superior to the Nyrstar proposal.
CBH has subsequently advised Nyrstar it does not intend to continue discussions based on the proposal.
“The Nyrstar proposal does not fully reflect the value of CBH shares, nor does it provide any upside for our shareholders,” Dennis said.