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In a strategic move, Australia's leading mining chemicals maker, Orica (ASX: ORI), announced its intention to acquire the entire stake of U.S.-based sodium cyanide manufacturer Cyanco Intermediate 4 Corp. This significant acquisition is valued at AU$640 million.
Funding the Future
To facilitate this substantial acquisition, Orica plans to fund it through an underwritten institutional placement, amounting to AU$400 million ($261.88 million). Complementing this, Orica will utilize its existing cash and debt facilities, showcasing a robust financial approach to the acquisition.
Share Purchase Plan
Orica is not stopping at the institutional placement; it also intends to launch a share purchase plan of AU$65 million. This additional financing step underlines Orica's commitment to securing the Cyanco deal and signifies a proactive financial strategy.
Supplying Vital Chemicals for Gold Processing
Cyanco, the target of Orica's acquisition, specializes in supplying sodium cyanide, a critical chemical in gold processing. The primary recipients of Cyanco's products are gold mining industries in the U.S., Canada, Mexico, Latin America, and Africa.
Orica's CEO expressed optimism about the acquisition, stating, "The acquisition will more than double Orica's existing sodium cyanide production capacity." This move positions Orica to cater to the flourishing U.S. and Canadian gold mining industries, enhancing its market presence significantly.
Timeline of Completion
The acquisition process is expected to be finalized by the end of fiscal 2024, as indicated by the Australian firm. This timeline underlines Orica's efficiency in navigating the necessary regulatory processes and completing strategic acquisitions.
In conclusion, Orica's acquisition of Cyanco Intermediate 4 Corp marks a transformative step in expanding its market influence. The financial strategies employed, coupled with the focus on doubling sodium cyanide production, indicate Orica's commitment to thriving in the dynamic landscape of the mining industry. As the deal progresses towards completion, the industry awaits the impact this strategic move will have on Orica's position in the global market.
