South32 Ltd. said June 18 that it struck an all-cash deal to acquire the remaining 83% stake in Arizona Mining Inc. for US$1.3 billion.

The diversified miner already owns a 17% interest in Arizona Mining.

South32 offered C$6.20 for each Arizona Mining share, representing a 50% premium to the June 15 closing price, which implies a total equity value of US$1.6 billion for the company.

Arizona Mining owns the Hermosa silver-zinc-lead project in Arizona, which hosts the base-metals prospective Taylor deposit and Central zinc, manganese and silver oxide resource, as well as an extensive land package with a potential for polymetallic and copper mineralization.

The transaction would require approval of at least 66.67% of the votes cast by Arizona Mining shareholders in a meeting expected to take place in the September quarter. South32 does not require shareholders' approval for the deal.

Arizona Mining's board has unanimously approved the offer and recommended the company's shareholders to vote in favor of the deal.

"Our all cash offer for Arizona Mining will allow us to optimize the design and development of one of the most exciting base metal projects in the industry," South32 CEO Graham Kerr said in a statement, adding that the company's deep understanding of Hermosa and surrounding tenement package makes it the natural owner of the project

In connection with the transaction, South32 agreed to provide Arizona Mining with a C$70 million working capital facility to fund the Hermosa project. The facility comprises an initial tranche of C$40 million available following signing and subsequent tranches up to a total of C$30 million, subject to South32's consent.

The deal is expected to close in the September quarter, subject to securing interim and final court orders.