Ivanhoe Electric to acquire remaining interest in Peru-focused Kaizen Discovery

Ivanhoe Electric (TSX: IE) has inked a definitive deal to acquire the remaining common shares of Peru-focused mineral explorer Kaizen Discovery (TSXV: KZD) that it does not already own, equivalent to 82.54% of those outstanding.

As consideration, Ivanhoe will issue one common stock for every 127 common shares of Kaizen acquired. In the end, more than 428,000 Ivanhoe shares will be issued to Kaizen shareholders to acquire about 54.4 million Kaizen shares.

This share exchange ratio represents a premium of 11.38% to the closing price of Kaizen’s shares on Dec. 1, 2023, the previous trading day (closing price of 11¢). A meeting will be held on Jan. 29, 2024, to seek shareholder approval for the transaction.

In a statement, Kaizen said this transaction provides increased liquidity for Kaizen shareholders due to the liquidity of the Ivanhoe shares. It also avoids the highly dilutive equity financings that are expected to be required should the company pursue a “go-alone” strategy.

Moreover, the takeover would give an opportunity for Kaizen shareholders to participate in the potential future increase in value of Ivanhoe, including Kaizen’s existing projects. The company’s main asset is the Pinaya copper-gold project in southeastern Peru, covering more than 10 km of strike length within the Andahuaylas-Yauri porphyry belt.

Exploration by Kaizen has led to the discovery of three contiguous zones containing over a 1.7-km strike in the central part of the Pinaya property. According to the company, there is potential for a large, unroofed porphyry copper system that could extend both to depth and laterally.

The project’s estimated measured resource totals 8.2 million tonnes grading 0.33% copper and 0.60 grams gold per tonne, for 27,000 tonnes of copper and 158,000 oz. of gold. Its estimated indicated resource totals 33.5 million tonnes grading 0.32% copper and 0.46 gram gold, for contained metal of 108,000 tonnes of copper and 497,000 oz. of gold. It also has an inferred resource of 40.2 million tonnes grading 0.36% copper and 0.30 gram gold per tonne, for 145,000 tonnes of copper and 388,000 oz. of gold. 

Kaizen also owns the Coppermine project in Nunavut, which represents a district-scale, greenfield exploration prospect discontinuously covering approximately 115 km of an easterly trending belt. This belt has numerous mineral showings that demonstrate potential for two distinct deposit types: sediment-hosted stratiform copper-silver and structurally controlled volcanic-hosted copper-silver.