Austral Resources Australia Ltd (ASX: AR1) has submitted an unsolicited, non-binding indicative proposal to acquire Hammer Metals Limited (ASX: HMX) in an all-scrip deal valuing the target at approximately A$80.8 million. The offer equates to an implied value of A$0.087 per share, which represents a 29.9% premium over the competing scheme of arrangement previously proposed by Larvotto Resources Limited. The existing Larvotto Resources proposal valued Hammer Metals shares at approximately A$0.067.

The primary driver for the bid is the integration of Hammer’s Queensland portfolio, most notably the Kalman resource, into the Mt Isa Operations ecosystem. Austral views the Kalman deposit—a 39.2Mt copper-gold-molybdenum-rhenium asset—as a critical long-term ore source for its Rocklands processing facility. The company expects that bringing this resource under its ownership will eliminate the risks associated with toll-treating third-party ore and allow for more efficient utilization of the Rocklands plant, which is currently slated for recommissioning in mid-2027.

Beyond the immediate processing benefits, the acquisition aims to consolidate tenements across the Mt Isa Inlier, creating a more cohesive footprint for the combined entity. Austral, which is currently debt-free with A$75 million in cash, intends to use its stronger balance sheet to fund an expanded exploration program across Hammer’s largely under-tested ground in the Mary Kathleen domain. Support for the transaction has already emerged, with holders of approximately 6-7% of Hammer's issued capital providing non-binding voting intentions in favour of the proposal.

"We believe this proposal represents a compelling and strategically superior outcome for Hammer shareholders. It offers a materially higher value proposition than the current Larvotto proposal, while combining two highly complementary Queensland copper businesses to create a larger, more relevant and better-capitalised company." — David Newling, Chairman

The proposed structure of the deal involves a combination of Austral scrip and a demerger of Hammer’s existing Western Australian gold assets, mirroring the structural arrangement previously agreed upon in the Larvotto offer. The proposal remains subject to several conditions, including the completion of mutual due diligence, the execution of a formal scheme implementation deed, and the final approval of the Hammer Board. Austral has appointed Euroz Hartleys and Shaw and Partners as its financial advisers, with GLG Legal acting as legal counsel. The Hammer Board has yet to formally determine that the Austral proposal constitutes a superior offer relative to its current obligations.

Read the full announcement: Non-Binding Indicative Proposal for Hammer Metals