Austral Resources Australia (ASX:AR1) will acquire all of the issued securities in Hammer Metals (ASX:HMX) via a scheme of arrangement for a consideration of 1.2903 Austral shares for each Hammer share under a binding scheme implementation deed, according to separate ASX filings on Tuesday.
Larvotto Resources (ASX:LRV) confirmed it will not exercise its matching right to submit a counterproposal to the Austral offer.
The board of Hammer, which represents 7% of Hammer shares, unanimously recommends that Hammer shareholders vote in favor of the scheme, subject to no superior proposal and the independent expert concluding that the scheme is in the best interests of Hammer shareholders.
Hammer shareholders are expected to own around 31.1% of the merged entity following implementation of the scheme.
Hammer's Western Australian gold assets currently held in Carnegie Exploration, including the Bronzewing South, Orelia North, and Mt Sefton gold projects, as well as other associated assets, will be de-merged via a capital reduction and in-specie share distribution to Hammer shareholders. The shareholders will own Carnegie Exploration or any such other entity incorporated for the purposes of undertaking the demerger.
Austral and Hammer entered into a binding loan agreement for an unsecured loan facility of up to AU$6 million to support Hammer through to scheme implementation.
Austral's shares fell over 8% in recent trading on Tuesday, while those of Hammer fell over 1%.