AAP Finance

South32 to pay $1.75bn for Arizona miner

By AAP Newswire

South32 has made a $US1.3 billion ($A1.75 billion) bid to take sole ownership of US-focused Arizona Mining.

The Australian business, which already owns 17 per cent of the zinc, lead and silver miner, says the directors of Arizona Mining will unanimously recommend shareholders accept the all-cash offer.

South32 chief executive, Graham Kerr called Arizona Mining's Hermosa Project in Santa Cruz County, Arizona, "one of the most exciting base metal projects in the industry".

"We have been a major shareholder in Arizona Mining since May 2017 and an active participant in the Hermosa Project with representation on the operations committee and a nominee on the board of directors," Mr Kerr said in a statement.

"Our deep understanding of this high grade resource and surrounding tenement package, and extensive experience at Cannington, makes us the natural owner of this project and ensures we are well positioned to bring it to development."

Arizona Mining is based in Vancouver and listed on the Toronto Stock Exchange.

The bid is worth $C6.20 ($A6.31) per share, which represents a 50 per cent premium to Friday's closing price of $C4.13.

The offer is fully funded, which Arizona Mining founder and executive chairman Richard Warke said reduced the risk to Arizona shareholders.

"South32's all cash offer ... represents a premium reflective of the truly world class nature of the Hermosa Project and allows shareholders to realise immediate value," Mr Warke said.

The deal, which values Arizona at $US1.6 billion, is not subject to any regulatory approvals and is expected to be completed in the September quarter.

South32's ASX-listed shares were worth $3.90 ahead of Monday's market open. In May, it reached an all-time high of $4.07.