Canadian mining company NorZinc has accepted a takeover offer from private equity group RCF VI (RCF) to ensure the long-term viability of its Prairie Creek project in Canada’s Northwest Territories.
NorZinc’s board of directors unanimously made the decision as the firm looks to address financial challenges such as negative working capital and limited cash to fund the Prairie Creek project’s development.
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RCF and its affiliates currently own a stake of around 48.31% in NorZinc.
Under the court-approved plan of arrangement, RCF has agreed to acquire all the outstanding NorZinc shares that it does not already own for C$0.0325 ($0.0218) in cash for each share.
This represents a premium of 3.5% to the 45-day volume-weighted average price of C$0.0314 to a share.
At the same time, the two firms have amended and restated a credit facility that provides for an $11m increase in the commitment.
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By GlobalDataNorZinc will use the proceeds from this to address its near-term liquidity needs.
NorZinc president and CEO Rohan Hazelton said: “The company has been working to address challenges with respect to its debt situation and the capital funding needs given the current market conditions.
“The board has explored all viable strategic alternatives. Ultimately, it has concluded that the unsolicited all-cash offer to the minority shareholders contained within the arrangement agreement is in the best interest of the company and its stakeholders.”
NorZinc said it has been seeking funding since early last year to support its long-term business plan, but the efforts had been unsuccessful to date.
Located in traditional Dene territory, the Prairie Creek Project comprises a mine and its surrounding land and access.
Based on the results of the a preliminary economic assessment carried out last year, the project will have a daily capacity of 2,400t and an operational life of 20 years.
