Why are Demetallica (ASX:DRM) shares trading 40% strong today?

2 min read | September 19, 2022 03:31 PM AEST | By Ritwika

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Highlights:

Demetallica informed today that AIC Mines Limited is willing to buy 100% shares of Demetallica.

This takeover is expected to strengthen AIC Mines and enable its business growth in Australia.

Demetallica shares went up 40% at 1:45 PM AEST on ASX post this update today.

Shares of Australian miner and explorer Demetallica Limited (ASX:DRM) skyrocketed on ASX today (19 September 2022), backed by a significant update. Demetallica shares have gained 40% to trade at AU$0.280 per share as of 1:45 PM AEST today.

In the last 12 months, Demetallica’s share price has gained 3.70% on ASX. In past one month, Demetallica’s share price has gained 16.67% (as of 2:37 PM AEST on ASX today).

In a recent update, the company announced that AIC Mines Limited (ASX:A1M) intended to buy 100% shares in the company. As per the terms of the takeover offer, AIC Mines will offer 1 AIC share for every 1.5 Dematallica shares, which is equivalent to AU$36 million or AU$0.337 per share to Demetallica.

AIC Mines’ takeover offer represents a substantial and attractive premium of:

68% to the closing price of Demetallica Shares of AU$0.200 as of 16 September 2022.
58% to the 30-day VWAP of Demetallica Shares of AU$0.213 on 16 September 2022.
35% to the Initial Public Offering price of Demetallica shares of AU$0.25.
The price implied by the offer is higher than Demetallica shares have ever traded.

The reason behind the takeover

AIC Mines is willing to buy Demetallica because AIC Mines’ Eloise copper mine and processing facility are only four kilometres away from Demetallica’s Jericho copper deposit. The combination of all these assets will provide the quickest and most efficient means of development, mining and processing of the Jericho deposit and potentially other deposits within Demetallica’s Chimera project.

As per AIC Mines, this combination may also create a company with enhanced scale, financial strength, market relevance and trading liquidity.

The takeover will also let AIC Mines to increase the mine life to more than 10 years and production to over 20,000tpa Cu and 10,000ozpa Au in concentrate – a 60% increase on the current production rate at Eloise.

What did the management of AIC Mining say?

Aaron Colleran, Managing Director, AIC Mining Limited, said:

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