Nzuri Copper Received Cash Acquisition Proposal From Chengtun Group

Nzuri Copper Limited (ASX: NZC) announced on 27th February 2019 that the company has received a cash acquisition proposal from Xuchen International Limited, subsidiary of Chinese metal and mining plaer, Chengtun Mining Group whereby Chengtun will acquire 100% of the share capital of Nzuri by way of a Scheme of Arrangement.

If the Scheme gets implemented, the Nzuri shareholder will be entitled to $0.37 cash per share, which will mark a 93% premium to the 30-days Volume weighted moving average (VWAP) of Nzuri shares of $0.19.

The offer price also marks a 42% premium to the closing share price on 26 February 2019 and 64% premium to the 3-month VWAP of Nzuri shares of $0.23.

Nzuri Copper Limited entered a Scheme implementation Deed under which it is proposed that Chengtun bidder will acquire 100% of the Nzuri share capital with Xuchen International Limited, who is the bidder of Chengtun.

The company board recommended unanimously that the offer is giving a good value and an opportunity for the shareholders of Nzuri to realise value at an attractive premium as compared to the recent trading price on ASX and seeing the low liquidity of the share. The board of the company recommends voting in the favour of the offer in the absence of any superior proposal. However, the board’s recommendation will be subjective to an independent expert conclusion.

In the recent scenario, the company announced that it has entered a term sheet for A$3 million funding in order to finance and development of Kalongwe. The company's major shareholder, Tembo Capital Mining Fund LP will set out the commercial terms on which it proposes to provide the loan facility of A$3 million to Nzuri. This is now unlikely to be drawn given the Chengtun Bidder proposal whereby the Bidder has offered to provide up to A$5 million interim funding by way of secured loan, for the operations at Kalongwe Copper-Cobalt project.

Operational Updates:

The company presented its December 2018 quarterly activity report on 31st January 2019. As per the company, its Kalongwe copper-cobalt project pre-development activities continues to advance. The project is the flagship asset of the company in the Democratic Republic of Congo (DRC) and is in the Lualaba province. This flagship project of the company contains a significant high-grade oxide

As per the company, during the quarter, it had received an engineering and procurement fixed price offer for all engineering and procurement associated with the Kalongwe project and is currently undergoing the negotiating procedure.

To further develop the Tails Dam and River diversion channel, the company undertook a detailed design of the tailing's storage facility and pit river diversion channel that will further boost the project development. The specialist consultants, Knight Piesold (KP) undertook the design of the facility. During the quarter, the company completed the Tails Dam design and tender documentation for the construction of the facility along with River diversion design and tender documentation for the construction.

As part of the detail dam design work, the company did a Geotechnical assessment of the tails and process plant sites in which six geotechnical holes (120m) were completed with the aim of collecting geotechnical data.

In the past 12 months, the company's Joint Venture with Ivanhoe Mines achieved several objectives like extending the mineralisation at the Kasangasi Project and solid cobalt results from the Monwezi prospect. Now, the company is focused on undertaking the data interpretation and planning for field season in 2019.

During the quarter, the company made a formal application to the DRC government for duty exoneration for all the project items which will be imported in DRC for the initial construction and operation of the project. The leaching test work at CORE in Brisbane is also near completion.

Liquidity Profile:

The company marked a cash outflow of A$2.9 million in exploration and evaluation and along with it marked a net cash outflow of $3.75 million from the operating activities at the end of the quarter.

The cash outflow from investing activities marked at A$82k at the end of the December quarter and net cash and cash equivalent reported at A$2.45 million at the end of the period.

Stock performance:

NZC closed the trading session on 1 March 2019 flat at A$0.315. The stock has offered positive YTD return at 28.57% as om 29 February 2019.


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