A2MP takeover bid casts doubt over Cameroon bauxite project's expansion plans

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Cameroon's flagship Minim-Martap bauxite project has come under fresh scrutiny after majority shareholder A2MP Investments launched a takeover bid for Canyon Resources, arguing that rising freight costs, lower marketing premiums and higher operating expenses could undermine the project's economics in its current form.

A2MP, which already owns 55.56 per cent of Canyon Resources, is seeking full control of the Australian mining company through an unsolicited off-market takeover offer. If successful, the company plans to reassess the scale of the Minim-Martap Bauxite Project, potentially replacing Canyon's original development strategy with a smaller operation integrated into A2MP's broader African aluminium value chain.

Higher costs put Minim-Martap economics under scrutiny

At the centre of A2MP's takeover proposal is a challenge to the assumptions underpinning Canyon's September 2025 Definitive Feasibility Study (DFS).

While the study estimated a pre-tax net present value (NPV) of USD 835 million and a pre-tax internal rate of return (IRR) of 29 per cent, based partly on an average USD 11 per tonne premium for the project's high-grade, low-silica bauxite, A2MP believes market conditions have changed significantly.

Following six months of discussions with prospective customers, the company now estimates a premium of around USD 5 per dry tonne, while forecasting freight costs of USD 32-36 per tonne, considerably higher than the USD 17 per tonne assumed in Canyon's feasibility study.

Combined, those revisions would reduce the project's economics by USD 21-25 per tonne, comprising roughly USD 6 less in premium and USD 15-19 more in freight costs.

A2MP also argued that insurance, export duties, sampling expenses, fuel costs and certain logistics investments may have been underestimated.

"The project may no longer be viable in its current form and with the financing currently available." the company said.

The assessment contrasts with Canyon's feasibility study, which estimated total capital expenditure of USD 446 million, including USD 348 million allocated to rail infrastructure. At the time, Canyon maintained that it had reasonable grounds to pursue financing despite not having secured the full funding package.

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Takeover could reshape Cameroon project

A2MP's offer extends to all Canyon shares it does not already own, valuing minority shares at AUD 0.05 (USD 0.035) each, representing a 42.5 per cent discount to Canyon's closing share price of AUD 0.087 (USD 0.061) on July 28.

The proposal values Canyon's equity at approximately AUD 103 million (USD 72.1 million), with an enterprise value of around AUD 188 million (USD 131.6 million) after accounting for net debt.

A2MP expects to spend up to AUD 45.82 million (USD 32.1 million) to acquire the remaining shares, increasing to AUD 46.57 million (USD 32.6 million) if all outstanding options are exercised. The company said it has approximately USD 127 million in available cash to fund the acquisition.

The offer is conditional upon A2MP increasing its ownership to at least 75 per cent. Should its stake exceed 90 per cent, the company intends to compulsorily acquire the remaining shares and delist Canyon from the Australian Securities Exchange (ASX). Even if ownership remains between 75 per cent and 90 per cent, A2MP said it may still seek a delisting, subject to ASX requirements.

Beyond the takeover, A2MP is considering a different development strategy for Minim-Martap.

If the acquisition proceeds, the company plans to conduct a comprehensive review of Canyon's assets, operations, financial position and development plans to determine whether the project can achieve profitable production under current market conditions.

Should independent advisers support its assessment, A2MP said it could abandon plans to develop the mine at the production levels outlined in the existing feasibility study, opting instead for a smaller operation while integrating the project into a broader value chain encompassing bauxite mining, alumina refining and aluminium production in Cameroon.

The project moves closer to exports despite review

The reassessment comes even as the Minim-Martap project continues to clear important operational milestones.

Read more: How Cameroon's billion-tonne Minim-Martap bauxite project moved closer to exports after CAMALCO cleared a key rail hurdle.

Earlier this year, Canyon Resources' Cameroonian subsidiary CAMALCO signed a rail operations agreement with Camrail, removing one of the project's most significant logistics hurdles and establishing a transport corridor linking the mine in the Adamawa Region with the Port of Douala through Cameroon's existing railway network.

The agreement, announced during the 48th Extraordinary Session of the Interministerial Committee for Railway Infrastructure (COMIFER), positions the project a step closer to commercial exports and could introduce one of the world's largest undeveloped high-grade bauxite deposits into the global seaborne market.

To support initial operations, CAMALCO has assembled a fleet of seven locomotives and 160 rail wagons. The first shipment of 60 wagons is expected to arrive in Cameroon by mid-August, with the remaining 100 wagons scheduled for delivery later this year.

During the first phase, the rail fleet is expected to transport approximately 35,000 tonnes of bauxite per month.

"COMIFER noted the progress made, as well as the intention of the mining partner (CAMALCO) to begin transporting bauxite in the coming days," said Claude Misse Ntone, Director of Railway Transport at Cameroon's Ministry of Transport.

CAMALCO has also been undertaking locomotive commissioning, brake testing and rail infrastructure upgrades alongside Camrail to prepare for operations. The company has strengthened its logistics chain by increasing its stake in Camrail to 26.9 per cent and acquiring an interest in Terminal Bois du Port de Douala, providing greater oversight of both rail and port infrastructure.

Despite those logistics achievements, the project's timetable has slipped.

The first bauxite shipment, originally expected during the first half of 2026, is now scheduled for the fourth quarter of 2026.

To increase rail transport capacity from 35,000 tonnes per month to 105,000 tonnes per month by the third quarter of 2027, Canyon estimates it will require an additional USD 160 million to acquire 15 more locomotives, 400 additional rail wagons and upgrade sections of the rail network.

Without that investment, annual transport capacity would remain around 420,000 tonnes, significantly below the 1.2 million tonnes per year production target outlined in the feasibility study.

Board urges shareholders to wait

Canyon Resources has yet to respond directly to A2MP's assessment of the project's economics.

In a statement issued on July 29, the company said its board is reviewing the bidder's statement and preparing its formal Target's Statement, urging shareholders not to take any action until the document is released.

The response will include the board's recommendation as well as an independent expert's opinion on whether A2MP's offer is fair and reasonable.

Beyond assessing the offer price, Canyon will also need to convince investors that the assumptions supporting its 2025 feasibility study remain valid despite higher freight costs, lower anticipated marketing premiums and additional funding requirements.

The takeover bid has ultimately set the stage for two competing visions for the Minim-Martap project: Canyon's plan to gradually develop a multi-million-tonne bauxite operation, and A2MP's proposal for a smaller, privately owned project integrated into its wider African mining and aluminium strategy.

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