International Minerals (IMZ:TSX) 5-day chart (Yahoo Finance)

International Minerals (IMZ:TSX) 5-day chart (Yahoo Finance)

International Minerals (IMZ:TSX) has agreed to be bought by Peruvian miner, Hochschild Mining (HOC:LN) for CAD$2.46 per share.  On top of the cash component, International Minerals shareholders will also receive one common share of Spinco which will hold IMZ’s current portfolio of Nevada assets including the Goldfield and Converse properties.  Spinco will also keep the US$58 million in cash currently held by IMZ.  Shares of IMZ were up 10% at time of writing to $2.87.

According to Paradigm Capital, financial advisor to IMZ, the total value of the deal to IMZ shareholders, including Spinco shares and existing cash is approximately $3.04 to $3.31 per share or roughly $350 to $400 million.  This represents a 24-35% premium to IMZ’s 20-day VWAP.  There is a $10 million break-fee associated with the deal.

(Hochschild)

(Hochschild)

IMZ President and CEO, Stephen Kay, said: "The IMZ board believes that the transaction is a win-win situation for both companies and their respective shareholders. The IMZ shareholders receive a significant cash component per share and retain future upside growth potential with a well-funded new company, SpinCo, and its advanced Gemfield gold project in mining-friendly Nevada. From Hochschild's perspective, the transaction results in their increasing their ownership from 60 per cent to 100 per cent in two of their key precious metal assets in Peru."

Hochschild is interested in IMZ’s 40%-stake in the Pallancata and Inmaculada projects of which Hochschild owns the remaining 60%.  HOC is already a 3.2% shareholder in IMZ and will retain a 3.2% interest in Spinco.  They also announced they would be raising between $50 and $100 million to help finance the acquisition of IMZ.

The release from the WSJ: Hochschild Mining to Acquire International Minerals

In February 2013, Hochschild acquired Andina Minerals and their vast Volcan deposit in Chile which hosted 6.6 million ounces of gold reserves for $100 million.