Carnaby scheme advances as Evolution offer wins ASIC registration

Scheme Booklet Clears ASIC Registration

Carnaby Resources Limited (ASX:CNB) has cleared a significant procedural hurdle in Evolution Mining Limited’s (ASX:EVN) proposed acquisition, with the scheme booklet registered by ASIC on 21 September. The document now sets out the terms of the transaction, the risks and the voting mechanics ahead of Carnaby’s shareholder meeting.

The deal remains a share-for-share transaction rather than a cash exit. Eligible Carnaby shareholders are due to receive 0.0682 new Evolution shares for every Carnaby share they hold. Based on Evolution’s A$13.27 closing price on 16 September, the consideration implied a value of about A$0.905 per Carnaby share, an 88.5% premium to Carnaby’s undisturbed A$0.48 close on 24 July. Because the ratio is fixed, however, that implied value will move with Evolution’s share price before implementation.

Independent Expert and Board Back the Transaction

BDO Corporate Finance Australia has concluded that the scheme is fair and reasonable, and therefore in Carnaby shareholders’ best interests, in the absence of a superior proposal. Carnaby’s board unanimously recommends that shareholders vote in favour on the same conditions, with each director intending to vote shares they control in favour. The directors collectively control about 7.3% of Carnaby’s shares, while the booklet discloses benefits and option treatment that shareholders are asked to consider when assessing that recommendation.

The board’s case rests on trading premium, funding certainty and a lower-risk development pathway for the Greater Duchess Copper Gold Project. Evolution intends to assess integrating Greater Duchess with its nearby Ernest Henry operation, potentially using existing infrastructure and latent processing capacity. Evolution says it plans to update the project feasibility study over the next 12 to 18 months if the transaction proceeds; that remains an intention, not an approved development outcome.

The proposed combination would also change Carnaby investors’ exposure materially. Former Carnaby shareholders receiving Evolution shares are expected to own about 0.8% of the merged group in aggregate, gaining diversification and liquidity but surrendering the concentrated exposure and influence that comes with owning a standalone developer. The booklet also identifies Evolution’s ongoing Red Lake-related class action and tax-loss litigation as risks attached to the larger group.

ACCC Condition Waived Before October Vote

Evolution has waived the condition requiring ACCC clearance, removing one outstanding transaction condition. The scheme still needs approval by more than 50% of shareholders present and voting by number and at least 75% of votes cast, followed by Supreme Court of Western Australia approval and satisfaction or waiver of the remaining conditions.

The Scheme Meeting is scheduled for 26 October, with the second Court hearing expected on 29 October and implementation targeted for 10 November if the timetable holds. Carnaby would then become wholly owned by Evolution and leave the ASX. A failed vote would leave Carnaby listed and facing the funding demands of advancing Greater Duchess, with the booklet warning that additional capital, potentially dilutive equity, may be required.

One important piece of transaction architecture sits behind the headline offer. If the scheme becomes effective, Glencore is due to subscribe for A$22 million of Carnaby shares as consideration for terminating its existing tolling and offtake arrangements. Evolution and Glencore instead intend to process Greater Duchess ore through Ernest Henry and sell the resulting concentrate under Evolution’s offtake arrangements. That structure supports the proposed integration, but it also means the development pathway remains dependent on studies and execution after control changes hands.