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Jan 21 (Reuters) - Copper miner Sandfire Resources (SFR) said on Monday it has approached explorer MOD Resources (MOD) about a potential combination of the two companies, valuing MOD at about A$88 million ($63 million).
Sandfire released a statement following a media report on its interest in MOD, which is exploring for copper and gold in Botswana, but said its approach was preliminary and non-binding and there was no assurance a deal would proceed.
It said the approach was made on the basis of A$0.38 per MOD share, which would represent a 73 percent premium to MOD's last close of A$0.22.
The move comes as Sandfire looks for a fresh copper pipeline, with its flagship DeGrussa copper-gold mine in Western Australia set to run down by about 2022. The company also has a project in Montana in North America. (http//bit.ly/2DnIRLx)
MOD has a number of prospective copper developments in Botswana, which is seen as a safe jurisdiction for mining in Africa, said an Australian mining analyst, who asked not to be named.
"MOD looks like an interesting undeveloped copper resource which could grow with further exploration," he said.
However, a successful takeover could create a challenge for Sandfire management given its existing commitments in the United States, he added.
MOD shares were put on a trading halt on Monday before the start of trade, ahead of an announcement on a capital raising.
($1 = 1.3965 Australian dollars)
