Mod Resources (MOD) has signed a binding agreement to acquire Metal Tiger’s (LON:MTR) 30% stake in the T3 deposit, the key asset in the greater Kalahari Copper Project in Botswana. The all scrip deal, comprising 17.2m MOD shares and 40.6m options (at zero exercise price), values the transaction at $26.6m based on MOD’s 20 day VWAP of $0.46/sh. This implies a see-through value of $87m for the T3 deposit. The transaction incorporates mechanisms to maintain MTR ‘s shareholding in MOD at <=12.5% and gives MOD the option to acquire 100% of joint venture (JV) exploration tenements within the project area. MTR has agreed to support MOD’s Board in any change of control recommendations. We see this transaction as a positive for MOD as it gains 100% of T3, increasing the Company’s control in the project and raising takeover appeal. We highlight MOD’s strategic value as one of the few listed companies globally with an economically feasible copper project and a belt scale land holding. Few acquirable copper plays remain listed on the ASX following the recent acquisitions of Avanco Resources (AVB) and Finders Resources (FND). BUY recommendation with revised target price of $0.83.
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