Smallcap explorer Demetallica (ASX: DRM) has confirmed that the off-market takeover offer made by AIC Mines (ASX: A1M) 19 September has now been declared unconditional. Demetallica is advising shareholders to reject the offer.

AIC Mines has offered one AIC share for every 1.5 Demetallica shares, which is equivalent to $36m or $0.337 per share to Demetallica.

Demetallica continues to advise its shareholders to reject the offer because, in short, it believes it has significant growth to give back to shareholders yet.

That position isn't entirely unreasonable: Demetallica had only been listed on the ASX for five months when it first received AIC's takeover offer. The value in the plays has not yet been truly recognised (neither by Demetallica, its shareholders, AIC Mines, or other potential buyers.)

And it goes without saying that another player's interest in DRM's tenement only adds weight to the reliability of the latter's geotechnical team.

Demetallica did, however, last month note it remains open to better offers.

Why AIC Mines wants Metallica

It’s all about proximity.

AIC Mines’ Eloise copper mine and processing facility are only four kilometres away from Demetallica’s Jericho copper deposit, which is located 65km south-east of Cloncurry in Qld.

It’s understood the combination of all these assets will provide the quickest and most efficient means of development, mining and processing of the Jericho deposit and potentially other deposits within Demetallica’s Chimera project.

Combining operations may also create a company with enhanced scale, financial strength, market relevance and trading liquidity.

The takeover will also let AIC Mines increase the mine life to more than 10 years and production to over 20,000tpa copper (Cu) and 10,000ozpa Gold (Au) in concentrate – a 60% increase on the current production rate at Eloise.

Jericho update

Revelations that the takeover by AIC Mines is now unconditional, coincides with Demetallica’s inaugural JORC 2012 Mineral Resource estimate (MRE) for the Jericho copper-gold deposit, the cornerstone asset of the Chimera Polymetal Project.

The MRE of 14.1m tonnes with grades of 1.46% Cu; 0.29 g/t Au and 1.6 g/t silver (Ag) at a cut-off of 0.85% Cu delivers a 62% increase in contained copper.

Prior to its recent drilling campaign undertaken between April through August 2022, Demetallica estimated an Exploration Target for Jericho in the range of 13-15Mt at 1.3-1.5% Cu and 0.29-0.32g/t Au.

MRE estimates

The MRE is said to contain 205,000 tonnes of copper, 129,000 ounces of gold and 744,000 ounces of silver.

The new MRE represents a substantial upgrade from the 2020 MRE, and also includes:

• 55% increase in overall resource tonnes

• 50% increase in contained gold

• 55% increase in contained silver

Jericho MRE October 2022

Source: Demetallica: Contains minor rounding errors

Demetallica’s managing director, Andrew Woskett is extremely pleased by the additional Exploration Target of 9 – 13Mt grading 1.3 – 1.8% Cu, 0.25 – 0.35g/t Au and 1.4 – 2g/t Ag, which he notes demonstrate considerable potential to continue growing the Jericho Resource through further drilling around the current MRE.

“With 27% of the MRE deemed Indicated Resource it is clear that Demetallica is steadily building a platform for development assessment of Jericho,” said Woskett.

“In the context of the takeover offer tabled by AIC Mines in September, we urge shareholders to consider the value of Jericho, particularly its value to AIC Mines, given the considerable extension to mine life Jericho may provide for AIC’s Eloise Mine.”

Demetallica was up 1.54% in afternoon trade.

Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Demetallica was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.