Australian miner Aeris Resources has announced the acquisition of Peel Mining in a transaction that will consolidate the South Cobar copper assets with the Tritton operations and create a larger midtier copper and gold producer.

The deal, announced this week, is inter-conditional with a proposed demerger of Peel’s remaining Cobar basin precious and base metals assets into a newly formed company (NewCo), which Peel intends to seek to list on the ASX.

Under the terms of the scheme, Peel shareholders will receive 0.3363 Aeris shares for each Peel share held, valuing the South Cobar copper project and associated tenements at A$0.19 a share based on Aeris’ February 11 closing price of A$0.565. Shareholders will also receive, on an indicative basis, one NewCo share for every 4.6 Peel shares held, valued at A$0.044 per Peel share.

The transaction implies a value of A$0.234 per Peel share, or about A$214-million on a fully diluted basis, representing a 46% premium to Peel’s last closing price, a 49.1% premium to its one-month volume-weighted average price (VWAP) and a 53.4% premium to its two-month VWAP.

Following completion, Peel shareholders are expected to own about 20.5% of the enlarged Aeris group.

The combination will bring together Aeris’ Tritton copper complex and Peel’s Mallee Bull and Wirlong projects in the Cobar basin of New South Wales. The South Cobar copper project hosts a combined mineral resource estimate of 10.6-million tonnes at 1.85% copper for 197 000 t of contained copper, 74% of which is in the indicated category. Combined with Tritton, the enlarged group will have a resource base of 29.5-million tonnes at 1.73% copper for 511 000 t of contained copper.

Aeris said the transaction would support a potential mine life of more than 10 years at Tritton, improve plant utilisation at its 1.8-million-tonne-a-year processing facility and eliminate the need for Peel to construct a standalone plant.

Executive chairperson Andre Labuschagne said the transaction would maximise Tritton's processing capacity and its strategic location. "Peel’s South Cobar copper project is a logical source of ore for Tritton, offering scope to extend mine life and transform our mining complex into a larger, and more resilient operation."

Peel MD and CEO Nick Woolrych said Peel shareholders would receive immediate value at an attractive premium and would hold about 20.5% of the combined group – allowing them to benefit from the market re-rate that is expected to flow from the creation of a larger base and precious metals producer with increased mine life and an enhanced production profile.

In addition, Peel shareholders will benefit from the proposed demerger of the company’s Cobar basin exploration portfolio through NewCo, receiving an in-specie distribution of shares in a new base- and precious metals-focused exploration company.

The Peel board has unanimously recommended that shareholders vote in favour of the scheme, in the absence of a superior proposal and subject to an independent expert concluding that the deal is in the best interests of shareholders.

Major shareholder Perth Capital, which controls about 16.1% of Peel, has indicated its intention to vote in favour on the same basis.