A2MP Issues Third Supplementary Statement on Canyon Takeover Offer

Valuation Disputes Highlight Funding and Project Risks

A2MP Investments FZCO has escalated its takeover battle for Canyon Resources Limited (ASX:CAY) with a third supplementary bidder’s statement that sharply criticises the valuation underpinning Canyon’s Target’s Statement and the accompanying Independent Expert’s Report. The bidder questions the reliance on a non-binding funding proposal, the treatment of residual resources, and the assumptions around production and project economics.

Central to A2MP’s argument is that the Independent Expert’s valuation leans heavily on uncertain funding commitments and contingent resources that may never be realised. The bidder points out that 96% of Canyon’s preferred equity value is attributed to these residual resources, which, under the Technical Expert’s own description, are valued using indicative methodologies. This raises questions over the timing and likelihood of value realisation for shareholders.

Moreover, A2MP highlights that the valuation assumes market-price forecasts without adjusting for discounted pricing linked to offtake and prepayment structures, and excludes transactions where controlling interests were acquired at a discount, which could be more comparable. The bidder also notes a stark drop in project valuation from A$80 million six months ago to A$27 million now, despite no material project improvements.

Board’s Model and Production Profile Under Scrutiny

The bidder challenges the Independent Board Committee’s (IBC) ‘reject’ recommendation, which is based on an updated model that assumes a 10 Mtpa production ramp-up, a figure the Independent Expert deemed lacking reasonable grounds for financeability. A2MP stresses that the updated model’s apparent increase in project NPV is largely a timing adjustment rather than an improvement in economics, and on a like-for-like basis, the project’s net present value has actually declined by roughly US$33 million.

This discrepancy raises concerns about the robustness of the IBC’s valuation and its implications for shareholders, especially given the Independent Expert’s preferred valuation of the funded project is below the offer price. The bidder urges shareholders to critically assess these inconsistencies when considering the offer.

Funding Gaps and Project Delays Confirmed

A2MP’s statement underscores that many of its previous concerns about freight costs, capital expenditure increases, development schedule delays, and funding shortfalls are effectively confirmed by Canyon’s own disclosures. Freight costs have nearly doubled since the Definitive Feasibility Study (DFS), reducing project value by an estimated US$184 million. Capital expenditure has risen due to new logistics requirements, and the first shipment target has been deferred from late 2026 to 2027.

Funding remains a critical hurdle, with AFG Bank suspending further drawdowns pending review and Canyon acknowledging the need for additional financing. The Independent Expert notes a funding shortfall exceeding US$300 million, with no concrete commitments beyond the existing facility. These factors collectively cast doubt on the standalone viability of the project without further capital injections, which may dilute existing shareholders.

Offer Defended as Fair and Sole Liquidity Option

Rejecting claims that the takeover offer is unfair to minority shareholders, A2MP emphasises that acceptance is voluntary and that the offer provides a rare opportunity for full liquidity in a stock with historically low trading volumes. The bidder holds a 56.55% stake and argues that its existing shareholding does not diminish the fairness of the offer terms.

The statement also addresses speculation around A2MP’s motivations and its role as a guarantor of the AFG Facility, noting that such arrangements are common in project finance structures. The bidder reiterates its commitment to realising the Minim Martap Bauxite Project’s long-term value, including economic and community benefits in Cameroon.

Regulatory Oversight and Next Steps

The takeover process remains subject to ongoing scrutiny by the Takeovers Panel, which has issued interim orders restraining A2MP from declaring the offer unconditional without consent. The bidder confirms compliance with these orders and encourages shareholders to consider all available information carefully before the offer closes at 7pm Sydney time on 21 September 2026.

With the project’s funding and valuation under intense debate, and regulatory proceedings adding complexity, shareholders face a nuanced decision on whether to accept the offer or back the standalone development path, which carries its own financial and execution risks.