Copper Mountain to buy Altona Mining in $90 mln deal

Copper Mountain Mining Corp (TSX: CMMC) has agreed to acquire the entire issued capital of Altona Mining Ltd, a mining company and owner of the Cloncurry Copper Project in Queensland, Australia. The deal values Altona at about A$93 million ($90 million). Altona’s major shareholder, Matchpoint Asia Fund, a Hong Kong hedge fund, indicated that it will vote in favour. Copper Mountain, a Vancouver-based mining company and 75 percent owner of the Copper Mountain Mine in British Columbia, said the deal will create a multi-jurisdictional, mid-tier copper producer with a pro forma market cap of about $300 million.

PRESS RELEASE

Copper Mountain to Acquire Altona Mining to Form a Major New Copper Producer

VANCOUVER, Nov. 19, 2017 /CNW/ – Copper Mountain Mining Corporation (“Copper Mountain” or “CMMC”) [TSX:CMMC] and Altona Mining Limited (“Altona” or “AOH”) [ASX:AOH] are pleased to jointly announce that they have agreed to combine the companies by way of a Scheme of Arrangement (“Scheme”) under the Australian Corporations Act 2001 pursuant to which CMMC will acquire the entire issued capital of Altona (the “Transaction”).

The acquisition will be effected pursuant to a Merger Implementation Deed (“MID”) under which Altona has agreed to propose the Scheme that would allow Altona to become a wholly owned subsidiary of CMMC.

Under the Transaction, each share of Altona (“Altona Share”) will be exchanged for 0.0974 (“Exchange Ratio”) of either a CHESS Depositary Interest of CMMC (“CMMC CDI”), which will trade on the Australian Securities Exchange (“ASX”), or, if elected, a CMMC common share (“CMMC Share”), which trades on the Toronto Stock Exchange (“TSX”). The total consideration offered for all of the outstanding shares of Altona is valued at approximately A$93 million and represents A$0.17 per share1, a 41.7% premium to A$0.12, the closing price of Altona shares on the day prior to the execution of the MID.

Altona’s key asset is the 100% owned undeveloped open pit Cloncurry Copper Project (“Cloncurry”) in Queensland, Australia, a mining friendly jurisdiction. Cloncurry currently has a measured and indicated mineral resource containing over 2 billion pounds (0.95 million tonnes) of copper and an inferred resource of 1.6 billion pounds (0.72 million tonnes) of copper. There is potential to add resources at depth and along strike in each of the deposits, and through exploration at numerous prospective targets within Altona’s approximate 397,000 hectare (3,970 sq km) land package.

CMMC’s principal asset is the 75% owned large open pit Copper Mountain Mine located in southern British Columbia near the town of Princeton. CMMC has a strategic alliance with Mitsubishi Materials Corporation which owns 25% of the Copper Mountain Mine and purchases 100% of the copper concentrate produced under a life of mine offtake agreement. CMMC is on track to achieve production guidance for 2017 of 75-85 million pounds (34,000-38,500 tonnes) of copper2. The Copper Mountain mine has a large resource that remains open laterally and at depth.

Directors and senior management of Altona have agreed to vote in favour of the Scheme in the absence of a Superior Proposal3 and subject to the Independent Expert concluding the Scheme is in the best interest of shareholders. Directors and senior management of Altona have provided voting intention statements in favour of the Scheme.

________________________________________
1 Based on the 5 day trailing volume weighted average price (VWAP) of CMMC and Altona on 17 November 2017.
2 Calculated on a 100% basis. CMMC owns 75% of the Copper Mountain Mine.
3 See the definition of ‘Superior Proposal’ in the MID

Highlights of the Proposed Combination

A multi-jurisdictional, mid-tier copper producer.
Annual potential copper production of approximately 160 million pounds (73,000 tonnes) of copper by 2020.
Combined Proven and Probable Reserves of 2.1 billion pounds (0.92 million tonnes) of copper.
Combined Measured and Indicated Resources over 4.1 billion pounds (1.8 million tonnes) of copper and an additional 3.6 billion pounds (1.5 million tonnes) of copper in Inferred Resources.
One of the leading TSX/ASX listed copper production companies, with significant production growth and exploration potential in two tier-one mining jurisdictions.
The combined company will have approximately C$78 million in cash.
Enhanced trading liquidity in both Canada (TSX) and Australia (ASX).
Pro forma market cap of approximately C$300 million, with CMMC shareholders owning 71.5% and Altona shareholders owning 28.5% of the combined entity.
The strength and complementary nature of Altona’s assets, management team, regional operating experience, and exploration expertise gives CMMC a stronger platform to grow.
CMMC’s construction and operational experience are well positioned to bring Cloncurry into production.
Offer represents a 41.7% premium to Altona’s price of A$0.12 per share, being the closing price on the day prior to the execution of the MID.
Major Altona shareholder (Matchpoint) has indicated support for the Scheme.

Management Commentary

Mr Jim O’Rourke, President and Chief Executive Officer of CMMC, commented: “Our Copper Mountain Mine is an efficient, stable operation with a long life ahead of it. At current copper prices, it is generating significant cash flow. For some time, CMMC has patiently been evaluating cost competitive opportunities to achieve a step-change in copper production. Cloncurry exemplifies the criteria of low-risk, near-term and high quality for which we have been seeking. We intend to progress Cloncurry into production with the aim of doubling CMMC’s copper production profile to the range of 160 million pounds (73,000 tonnes) of copper per annum with significant precious metals credits. This additional copper production is timely to capitalize on the projected strong copper cycle.”

Dr Alistair Cowden, Managing Director of Altona, added: “We are delighted to join CMMC to form a new high growth copper producer. We are excited to bring CMMC’s depth of experience in constructing and operating a large scale open pit copper mine to bear upon the Cloncurry Copper Project. Altona’s shareholders will receive a premium and will also gain immediate exposure to copper production just as copper prices have recovered and market shortfalls are predicted over the near term. This is a great opportunity for our shareholders to participate in the creation of a leading mid-sized copper producer.”

Merger Summary

CMMC and Altona have executed a MID under which Altona has agreed to propose the Scheme that would allow Altona to become a wholly owned subsidiary of CMMC. The consideration being offered to Altona Shareholders is one CMMC CDI or CMMC share for every 10.2669 Altona Shares, which represents 17 cents per share, a premium of 41.7% to Altona’s last price of A$0.12 as of the close on 17 November 2017 and based on CMMC’s 5 day trailing VWAP from 17 November 2017.

In conjunction with the Scheme, CMMC will seek a listing on the ASX and apply for quotation of CMMC shares in the form of CHESS Depositary Interests (“CDIs”), which would enable Altona shareholders to elect to receive the Scheme consideration in the form of CMMC CDIs.

The Scheme is subject to customary conditions for a transaction of this nature, which are set out in full in the MID. Major conditions include:

Approval being received from the shareholders of Altona and the court in relation to the Scheme.
Approval being received from the shareholders of CMMC and the TSX for the issue of consideration shares.
The Independent Expert concluding that the Scheme is in the best interests of Altona shareholders.
Approval for and quotation of CMMC CDIs on the ASX.
Foreign Investment Review Board approval.
Other customary regulatory and court approvals for a transaction of this nature.
The parties have agreed that unless the MID is terminated, Altona will not solicit any competing proposal or participate in any discussions or negotiations in relation to any competing proposal unless failure to do so would involve a breach of the fiduciary duties of its Directors. Altona and CMMC have agreed to pay a break fee of A$0.9 million in certain circumstances leading to the Scheme not proceeding.

Benefits to Copper Mountain Shareholders

Acquisition of the low risk Cloncurry Copper Project (“Cloncurry”), including significant copper and gold resources and reserves, and a large mineral tenure position. The Cloncurry project is located in one of the world’s most prominent base metals production regions in Queensland, Australia, host to leading mines including Mt Isa, Dugald River, Cannington and Ernest Henry.
Development of Cloncurry has the potential to double CMMC’s production profile, with the anticipated addition of over 80 million pounds (39,000 tonnes) of copper and 17,000 ounces of gold per annum in concentrate based on Altona’s updated Definitive Feasibility Study (“DFS”) completed in July 2017. The DFS states that the major required permits, including Native Title, Mining Licenses and an Environmental Authority, have been received.
Significant increase in overall contained copper in Measured and Indicated Resources (by 104% to 4.1 billion pounds of copper) and Proven and Probable Reserves (by 87% to 2.0 billion pounds (0.92 million tonnes of copper), in addition to regional discovery potential surrounding Cloncurry.
Asset and geographical diversification, providing a lower risk profile for the combined entity.
Exposure to Altona’s large land package and their exploration success in Australia.
Increased market prominence in combination, leading to a potential re-rating as a mid-tier copper producer.

Benefits to Altona Shareholders

CMMC has an experienced management team with proven development and mine operation capabilities, having expertise in financing, building, commissioning and operating the 12-14 million tonnes per annum open pit Copper Mountain Mine (“Copper Mountain Mine”) located in southern British Columbia, Canada. CMMC will use this operational expertise to maximise the value of Altona’s Cloncurry project.
With CMMC’s annual production guidance of 75-85 million pounds (34,000-38,500 tonnes) of copper in 2017, combined with 86 million pounds (39,000 tonnes) of potential copper production from Cloncurry, the combined entity has the potential to become a top 4 Australian copper producer.
Altona shareholders to receive a significant premium of 41.7% to Altona’s closing share price on 17 November 2017, a 36.9% premium to Altona’s trailing 10-day volume weighted average price (“VWAP”) and a 33.2% premium to Altona’s 20-day VWAP as of the close on 17 November 2017.
Benefit of immediate cash flow from CMMC’s production asset, whilst retaining ongoing exposure to Cloncurry as it progresses through development.
Creation of a leading copper producing company with a diversified portfolio of production and development assets that will be uniquely positioned on the ASX.

Altona Board and Shareholder Support

The Altona Board are in favour of the Scheme and unanimously recommend that Altona shareholders vote in favour of the Scheme, in the absence of a Superior Proposal and subject to the Independent Expert concluding that the Scheme is in the best interests of Altona shareholders.

Each of Altona’s directors and officers has entered into a Support Deed undertaking to vote in favour of the Scheme, in the absence of a Superior Proposal and subject to the Independent Expert concluding that the Scheme is in the best interests of Altona shareholders.

Altona’s major shareholder, Matchpoint Asia Fund Limited, has also indicated that it will vote in favour of the Scheme, in the absence of a Superior Proposal and subject to the Independent Expert concluding that the Scheme is in the best interests of Altona shareholders.

CMMC Shareholder approval

CMMC is required to obtain the approval of the TSX and its shareholders in connection with the issue of common shares under the Scheme. Each of CMMC’s directors and officers have agreed to vote in favour of the required CMMC shareholder resolutions.

The CMMC Board unanimously recommends that CMMC shareholders vote in favour of the issue of CMMC common shares contemplated by the Scheme. The CMMC Board intends to vote any CMMC Shares in respect of which they have the power to direct a vote in favour of the necessary resolutions.

Management Team and Board of Directors

CMMC will continue to be headquartered in Vancouver, British Columbia and plans to retain a regional office in Perth, Australia on implementation of the Scheme. Dr Alistair Cowden, Managing Director of Altona, will remain in his position until the Scheme closes, after which he will be appointed to join the Board of Directors of CMMC and will continue in an executive role in Australia.

Indicative Timetable

Full particulars of the Scheme, including terms and recommendations will be provided to Altona shareholders through a Scheme Booklet which will include an Independent Expert’s Report by KPMG Corporate Finance, a division of KPMG Financial Advisory Services (Australia) Pty Ltd. The indicative timetable for implementation of the Acquisition is anticipated to be as follows: (see details here.)

Principal Advisors

CMMC’s corporate adviser is Haywood Securities Inc., its Canadian legal advisor is Farris, Vaughan, Wills & Murphy LLP and its Australian legal advisor is Clayton Utz.

Altona’s corporate adviser is Hartleys Limited, its Australian legal advisor is Gilbert + Tobin and its Canadian Legal advisor is Fasken Martineau LLP.

Conference Call and Webcast

CMMC will host a conference call and webcast on Monday, 20 November 2017 at 8:00 am PST for members of the investment community to discuss the transaction. Participants may join the conference call using the following call-in details. This discussion will be followed by a question-and-answer period with investors:

Live dial-in information
Toronto and international:
647-427-7450
North America (toll-free):
1-888-231-8191
To participate in the webcast live via your computer go to:
http://event.on24.com/r.htm?e=1554144&s=1&k=3081F0A87D877FEAD56715CD4EA46D87

Replay call information
Toronto and international:
416-849-0833, passcode 5689618
North America (toll-free):
1-855-859-2056, passcode 5689618
The conference call replay will be available from 10:30 am (PDT) on November 20, 2017, until 11:59 pm PST on December 4, 2017. Participant audio webcast will also be available on the Company’s website at http://www.CuMtn.com

About Copper Mountain Mining Corporation

CMMC’s principal asset is the 75% owned large open pit Copper Mountain Mine located in southern British Columbia near the town of Princeton. CMMC has a strategic alliance with Mitsubishi Materials Corporation which owns 25% of the Copper Mountain Mine and purchases 100% of the copper concentrate produced under a life of mine offtake agreement. CMMC is on track to achieve production guidance for 2017 of 75-85 million pounds of copper. The Copper Mountain mine has a large resource of copper that remains open laterally and at depth. This significant exploration potential is being evaluated over the next few years in order to fully appreciate the property’s development potential. Additional information is available on CMMC’s web page at www.cumtn.com.

About Altona Mining Limited

Altona’s principal asset is the Cloncurry Copper Project in Queensland, Australia found within a dominant 3,970 sq km land package in the highly prospective Mt. Isa inlier. It is envisaged that a 7 million tonnes per annum open pit copper-gold mine and concentrator will be developed. The development is permitted with proposed annual production of 39,000 tonnes of copper and 17,200 ounces of gold for a minimum of 14 years. The Definitive Feasibility Study was refreshed in August 2017.

(See statements, appendices and other information here.)

For further information: Copper Mountain Mining Corporation: Jim O’Rourke, President & CEO, Copper Mountain Mining Corporation, Phone: +1 604-682-2992 ext. 223; Dan Gibbons, Investor Relations, Copper Mountain Mining Corporation, Phone: +1 604-682-2992 ext. 238; Rod Shier, Chief Financial Officer, Copper Mountain Mining Corporation, Phone: +1 604-682-2992 ext. 222; Altona Mining Limited: Alistair Cowden, Managing Director, Altona Mining Limited, Phone: +61 8 9485 2929; David Ikin, Media Relations – Australia, PPR, Phone: +61 8 9388 0944; Jochen Staiger, Swiss Resource Capital AG – Germany, Phone: +41 71 354 8501

Photo courtesy of Copper Mountain Mining Corp