Alpayana SAC, a privately owned Peruvian mining company, has announced its intention to make an all-cash takeover offer directly to the shareholders of Sierra Metals Inc.
Offer Details:
- Price Per Share: Alpayana proposes to acquire Sierra Metals shares at C$0.85 each, representing a 10% premium over the closing price of C$0.77 on the Toronto Stock Exchange as of December 13, 2024.
- Premium Analysis: This offer also reflects a 26% premium over Sierra Metals’ 30-day volume-weighted average price of C$0.676, indicating Alpayana’s confidence in the value of Sierra Metals’ assets.
Alpayana’s Rationale:
- Direct Appeal to Shareholders: After unsuccessful attempts to engage with Sierra Metals’ board, Alpayana is now approaching shareholders directly, allowing them to decide on the proposed acquisition.
- Financial Concerns: Alpayana highlights Sierra Metals’ financial challenges, including accumulated net losses of $153 million from 2013 to Q3 2024, gross debt of $120.2 million as of September 30, 2024, and a working capital shortfall. These factors, according to Alpayana, may hinder Sierra Metals’ ability to pay future dividends.
Alpayana’s Profile:
- Operational History: With over 38 years in the Peruvian mining sector, Alpayana has successfully acquired and operated mines, including the Yauliyacu and Iscaycruz mines from Glencore and the Morococha mine from Pan American Silver.
- Financial Health: The company reports being debt-free with annual revenues exceeding $500 million, positioning it as a robust contender for this acquisition.
Sierra Metals’ Recent Developments:
- Operational Milestone: Sierra Metals recently announced that its Yauricocha mine in Peru achieved full throughput capacity of 3,600 tonnes per day in early Q4 2024, marking a 30% increase from December 2023 levels.
- Share Consolidation Proposal: The company has proposed a one-for-twenty share consolidation, aiming to attract new institutional investors and retail shareholders by enhancing the stock’s appeal.
Market Reaction:
- Stock Performance: Following Alpayana’s announcement, Sierra Metals’ stock rose to C$0.84, reflecting a 9.1% intraday gain and a market capitalmately C$175.1 million.
Next Steps:
- Shareholder Decision: Sierra Metals’ shareholders will evaluate the offer’s merits, considering the premium offered and the company’s current financ
- Potential Implications: If accepted, this acquisition could significantly impact Sierra Metals’ operations and strategic direction, particularly concerning its assets in Peru and Mexico.
As of now, Sierra Metals has not publicly responded to Alpayana’s proposal. Shareholders and industry analysts will closely monitor developments to assess the potential outcomes of this unsolicited takeover bid.
