Cygnus Metals Shareholders Approve Central Asia Metals Acquisition Scheme

Cygnus Metals shareholders have approved the scheme of arrangement under which Central Asia Metals PLC would acquire 100% of the company, clearing a major shareholder hurdle in the all-share acquisition.

At the September 18 scheme meeting, 81.38% of Cygnus shareholders present and voting supported the resolution, while 98.35% of all votes cast were in favor. A separate minority approval vote also passed, with 97.88% of eligible votes supporting the scheme after the exclusions required for that vote.

The result moves the acquisition closer to completion, but the deal is not yet unconditional. Cygnus is due to seek approval from the Supreme Court of Western Australia on September 23, and Kazakhstan consent for the issue of new Central Asia Metals shares remained outstanding in the latest status update.

The shareholder vote clears a key condition

Cygnus said the scheme resolution passed the required shareholder majorities as well as the separate minority approval test. The vote was conducted by poll, meaning the result reflects both the number of shareholders voting and the shares represented by those votes. The company’s formal market notices are available through its investor centre.

Support was especially decisive when measured by shares voted, with 98.35% of votes cast backing the proposal. The 81.38% figure measures the proportion of shareholders present and voting who supported it, rather than the proportion of shares voted. Cygnus said the necessary thresholds were satisfied on both measures.

Central Asia Metals shareholders had already approved the allotment of the new CAML shares needed for the acquisition at an extraordinary general meeting on September 4. That removed another condition that had to be met before the scheme could be implemented.

With the Cygnus vote completed, the main shareholder decision on the target side of the deal has also been resolved. It does not replace the remaining court and regulatory steps. The timetable published by Cygnus continues to depend on those conditions being satisfied or, where permitted, waived or otherwise dealt with before implementation.

Central Asia Metals is offering shares for Cygnus

Under the terms set out on Central Asia Metals’ acquisition page, Cygnus shareholders are to receive 0.06 new CAML shares for each Cygnus share they hold. When the acquisition was announced in June, that exchange ratio implied an equity value of about A$232 million for Cygnus.

Rather than paying cash, Central Asia Metals is using newly issued shares as the consideration. CAML has said that, after completion, existing CAML shareholders are expected to own about 70% of the enlarged group and former Cygnus shareholders about 30%. The structure allows Cygnus investors to retain exposure to the Chibougamau project through their new holding in CAML.

Chibougamau is the central strategic asset behind the acquisition. The copper-gold project is in central Quebec and includes the Corner Bay, Devlin, Cedar Bay, Joe Mann and Golden Eye deposits around an existing processing facility. Cygnus currently reports a project Mineral Resource Estimate of 14.9 million tonnes at 3.3% copper equivalent, including 6.4 million tonnes at 3.0% copper equivalent in the measured and indicated categories and 8.5 million tonnes at 3.5% copper equivalent in the inferred category.

Existing infrastructure includes a 900,000-tonne-per-year processing plant that Cygnus says last operated in 2008. For Central Asia Metals, buying Cygnus would add a Canadian development-stage copper-gold asset to a portfolio that already includes producing operations in Kazakhstan and North Macedonia. CAML has presented the acquisition as a way to add a new development pipeline without using cash consideration for the purchase itself.

For Cygnus shareholders, the value they ultimately receive will continue to move with the market price of CAML shares because the consideration is fixed as a share exchange ratio, not a fixed cash amount. The A$232 million figure was an implied equity value at announcement, not a guaranteed cash payment at completion.

Court approval and Kazakhstan consent are still pending

Attention now shifts to the second court hearing at 2:15 p.m. Australian Western Standard Time on September 23. Cygnus is asking the Supreme Court of Western Australia to approve the scheme after the shareholder vote.

If the court grants approval on the current timetable, Cygnus intends to lodge the court orders with the Australian Securities and Investments Commission on September 24. The scheme would then become effective, subject to the remaining conditions. Cygnus has indicated that its ASX shares would be suspended after the close of trading that day, while trading on the TSX Venture Exchange is expected to cease after the September 23 close.

One timing issue remains unresolved. In a September 14 update, the companies said Kazakhstan regulatory consent for the issue of the new CAML shares was still in process, with the statutory timetable requiring a decision no later than October 1. North Macedonian merger clearance had already been obtained.

Because the Kazakhstan deadline falls after the currently scheduled September 23 court hearing, Cygnus said it may seek to move the hearing if approval has not arrived in time. Another possibility identified by the company is asking the court to allow the Kazakhstan consent to be treated as a condition to be satisfied after court approval. Central Asia Metals said it was not aware of a specific reason why the consent would not be received through the ordinary process, but the approval had not been secured as of the latest update.

If the remaining approvals line up with the current timetable, the scheme is scheduled to be implemented on October 5. New CAML shares issued to Cygnus shareholders are also expected to begin trading on AIM that day. Those dates remain indicative and can change if the court process or regulatory approvals take longer than expected.