Katanga Mining - CEO, Mark Davis
CEO, Mark Davis
Source: Mining and Business
  • Katanga Mining’s (TSX:KAT) share price has shot up more than 100 per cent today, after announcing a privatisation agreement with UK-based Glencore plc
  • If the deal is approved, Katanga will become a private company though an amalgamation with its subsidiary Yukon Inc, on or around June 5, 2020
  • Through the deal, Glencore, which is already a substantially shareholder in Katanga, will pay C$0.16 per share in cash for any other outstanding interests
  • Katanga cited a lack a meaningful public float and the ongoing cost of listing as reasons for the decision
  • Katanga Mining Limited (KAT) is up 113.33 per cent, with shares trading for $0.16 and a market cap of $9.8 billion

Katanga Mining’s (TSX:KAT) share price has shot up more than 100 per cent today, after announcing a privatisation agreement with UK-based Glencore plc.

The two companies have now signed a definitive agreement, which will amalgamate Katanga Mining with Yukon Inc, one of its private subsidiaries.

Glencore, which is already a substantially shareholder in Katanga, will pay C$0.16 per share in cash for any other outstanding interests. This is a substantial premium at double Katanga’s recent share price.

Katanga operates a copper and cobalt mining complex in the DR Congo. The site includes underground and open-pit mining operations, as well as on-site plant and concentrator facillities.

A special committee, put together by Katanga’s Board of Directors, has unanimously approved the company privatising.

The committee cited a lack of meaningful public float, which is already majority owned by Glencore, as well as the ongoing costs of listing as reasons to privatise. Furthermore, with commodity prices continuing to drop in recent months committee determined that privatising was the safest option.

While the deal still needs shareholders’ approval, Glencore plans to vote its entire 99.5 per cent interest in favour of the amalgamation.

If approved, the two companies expect the deal to finalise around June 5, 2020.

Turning to COVID-19, in order to properly discuss and process the deal during the pandemic, Katanga has been forced to alter its by-laws to allow its Board of Directors to meet remotely.

Alongside this news, the company stated its first quarter results have not been materially impacted by the global pandemic.

However, with the DR Congo declaring a state of emergency late last month, and case numbers still rising in the region, the company said future quarters could be impacted.

Katanga Mining Limited (KAT) is up 113.33 per cent, with shares trading for $0.16 at 12:44pm EST.

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