Alpayana SAC, a Peruvian family-owned private mining company, said on Monday it intends to make an all-cash takeover offer directly to the shareholders of Sierra Metals (TSX: SMT), having previously failed in its bid to buy the company to Sierra’s board.
The offer will be priced at C$0.85 per share, which is a 10% premium over Sierra Metals’ closing price of C$0.77 on the TSX last Friday, and a 26% premium to the stock’s 30-day volume weighted average price of C$0.676.
By press time, Sierra Metals surged by nearly 11.7% at C$0.86 apiece, for a market capitalization of C$185 million. The stock had traded between C$0.61 and C$1.05 over the past 52 weeks.
Alpayana has been operating and developing mines in Peru for over 38 years. Recently, it has made successful bids for the Yauliyacu and Iscaycruz mines from Glencore and the Morococha mine from Pan American Silver. The firm is currently debt-free and has annual revenues of over $500 million.
By making its offer directly to Sierra’s shareholders, Alpayana said they would have the opportunity to determine what is best for their investment. It believes the offer is “attractive” as this provides liquidity to shareholders of a company that has “expensive liabilities, a working capital shortfall, a large asset base subject to potential impairments.”
The Peruvian firm noted that Sierra has already reported accumulated net losses of $153 million from 2013 to the end of third quarter 2024. By Sept. 30, it had $120.2 million gross debt and capital deficit, which Alpayana says will “continue to impair Sierra’s ability to pay future dividends.”
Alpayana also said that the management team at Sierra has put off takeover attempts over past few years, including not disclosing a January 2023 non-binding offer to the public that resulted in a surge in Sierra’s share price and made it more expensive to pursue.
Sierra Metals was not immediately available to provide a statement to Mining.com.
The offer follows Sierra Metals’ announcement last week of a proposed share consolidation on a one-for-twenty basis, which the company said “will provide an attractive entry point for potential new institutional investors and retail shareholders.”
The Canadian miner currently operates two producing copper mines, the Yauricocha mine in Peru and the Bolivar mine in Mexico. Together, they are expected to produce 44,600 to 48,500 lb. of copper in 2025, at all-in sustaining costs of $2.91-$3.11 and $3.45-$3.62 respectively.
