ASX has granted Hammer Metals waivers allowing it to cancel 29.5 million options and restructure its capital for the proposed Austral Resources deal and Western Australian gold demerger. The transaction still depends on the scheme becoming effective, while the demerger requires shareholder approval.
- ASX waiver for cancellation of 29.5 million Hammer options
- A$1.21 million maximum option cancellation consideration
- 3 million performance rights linked to 3.87 million Austral shares
- Capital reduction may take Hammer shares below 20 cents
- Board unanimously recommends the Austral scheme, subject to conditions
ASX Removes Two Structural Obstacles
Hammer Metals Limited (ASX:HMX) has cleared two listing-rule hurdles standing in the way of its proposed acquisition by Austral Resources Australia Ltd (ASX:AR1) and the separate demerger of its Western Australian gold assets. ASX has granted waivers permitting the planned treatment of Hammer’s options and performance rights, and allowing a capital reduction that could push Hammer’s share price below the 20-cent threshold in Listing Rule 7.25.
The first waiver allows Hammer to cancel unexercised options for cash and management performance rights for Austral shares without seeking separate shareholder approval, provided the scheme becomes effective. The announcement’s heading refers to Listing Rule 6.23.3, although the body consistently identifies the relevant waiver as Listing Rule 6.23.2.
Option Holders Face A$1.21 Million Cash Pool
There are 29.5 million Hammer options on issue across six tranches. If none are exercised before the scheme record date, their holders would receive consideration calculated using a Black-Scholes valuation, ranging from A$0.025 to A$0.055 per option.
On the terms disclosed, the total consideration would be A$1,211,500. The largest individual tranche comprises 7 million options exercisable at A$0.06 and would attract A$0.055 per option; another 9.5 million options expiring on 30 November 2026 would attract A$0.025 each. The final entitlement could change if options are exercised before the relevant record date.
Performance Rights Convert into Austral Equity
Hammer also has 3 million management performance rights held by managing director Daniel Thomas. If they neither lapse nor convert into Hammer shares before the record date, their cancellation would be exchanged for 3,870,900 new fully paid Austral shares, or the equivalent fractional entitlement described in the announcement.
Hammer and Austral must use reasonable endeavours to execute cancellation deeds with the relevant holders. The detailed cancellation terms and consideration must also be set out to ASX’s satisfaction in the scheme booklet, and the scheme itself must become effective before the waiver can operate.
Gold Demerger Can Proceed Below 20 Cents
The second waiver addresses the proposed demerger of Hammer’s Western Australian gold assets, currently held through Carnegie Exploration. The demerger is intended to be implemented through a capital reduction and an in-specie distribution of shares in Carnegie Exploration, or another entity established for the demerger, to eligible Hammer shareholders on a pro rata basis.
Hammer said its shares closed at A$0.089 on 8 September, against a 52-week range of A$0.022 to A$0.091. Because a return of capital is expected to reduce the value remaining in Hammer, the shares may trade below, or further below, 20 cents after the ex-return-of-capital date. The waiver permits that outcome, but only after Hammer shareholders approve the capital reduction.
Board Maintains Support for Austral Scheme
The Hammer board unanimously recommends that shareholders vote in favour of the scheme, subject to no superior proposal emerging and an independent expert concluding that the transaction is in shareholders’ best interests. Directors also intend to vote their relevant or controlled shares in favour on the same conditions.
The waivers remove specific listing-rule impediments, rather than guaranteeing completion. The key next tests are the scheme booklet and independent expert’s conclusion, shareholder approval for the demerger capital reduction, and satisfaction of the remaining implementation conditions. The value ultimately retained in Hammer after the gold assets are separated will be shaped by the demerger terms, which have not been disclosed in this announcement.
Bottom Line?
The waivers make the proposed scheme and gold demerger easier to execute, but the decisive shareholder and scheme conditions remain ahead.
Questions in the middle?
- Will the independent expert endorse the Austral scheme as being in Hammer shareholders’ best interests?
- What value and structure will be assigned to the Western Australian gold assets in the demerger?
- How many options and performance rights will remain outstanding at the relevant record dates?