Middle Island Resources (Middle Island) has announced an all scrip off‐market take‐over offer for all of the issued ordinary shares of Alto Metals.


Image: Middle Island launches takeover offer for AltoMetals. Photo courtesy of PublicDomainPictures/Pixabay.

The Directors of Middle Island have formed the view that the combination of the assets  of  the two  companies (the Combined  Group) creates,  among other  material  benefits  to  the  shareholders  of  the  Combined  Group,a company with near-term  cash  flow potential and considerable  production and exploration upside.

Access   to   Middle   Island’s processing   plant,   currently   on   care   and maintenance,will provide Alto shareholders with  an  immediate,  proximal and  cost-effective  processing  solution for Alto’s gold resources that  is  not otherwise available to Alto.

The Alto deposits are anticipated to provide initial mill feed and critical mass to support an early recommissioning of the Sandstone gold processing plant,and Middle  Island’s Two  Mile  Hill  deposits  offer  considerable  scale  and project longevity.

Middle  Island has  received indicative broker  support with  respect  to the Combined Group for an equity capital raising of approximately $5million in additional  funds to advance  the feasibility  and recommissioning  of  the Sandstone gold processing plant.

The  combination  of  Middle  Island  and  Alto will consolidate the entire Sandstone greenstone belt and dataset under a single entity.

Middle Island’s Offer

Middle Island is offering 5 Middle Island ordinary shares for every 1 Alto Share.

The Offer values Alto at approximately $9.4million, based on the closing price for Middle Island shares on 28 February 2019 of A$0.009,which represents a premium of:

  • 61% to Alto’s last closing price of A$0.028 on 28 February 2019
  • 61% to Alto’s 5-Day VWAP of A$0.028, up to and including 28 February 2019
  • 34% to Alto’s 10-Day VWAP of A$0.0335, up to and including 28 February 2019

Rick Yeates, Middle Island’s Managing Director,commenting on the Offer,said: “Middle Island’s Offer is compelling for Alto shareholders, who will receive a significant premium based on the last closing price for their shares and will benefit in the future growth potential of the proposed Combined Group

“Middle Island will integrate Alto’s assets with Middle Island’s Sandstone gold project, and immediately embark  on  an  updated feasibility  study, incorporating Alto’s Mineral  Resources,  to determine  the economics of recommissioning the Sandstone gold processing plant.

“The collective Middle  Island‐Alto gold assets offer a  substantial  growth  opportunity  for  current  and future  shareholders of  the  Combined  Group,  via  low  capital  intensity and a near-term  production profile. The  further  potential is to  significantly  extend  this  production profile via Middle Island’s Two Mile  Hill  underground  deposits,  consolidate further  proximal  deposits  within  a  100km  radius, and amalgamate an entire greenstone belt offering significant resource and exploration upside.

“In the view  of  the  Middle  Island  directors, the  premium  offered, the  funding  support, Middle  Island’s technical  and management  expertise, and participation in the combined Middle Island‐Alto upside, makes the bid a compelling proposal.”

Source: Company Press Release