Shares in Atlas Metals (LSE:AMG) rocketed 390% on Wednesday after the little-known resources group unveiled plans for a £1 billion reverse takeover of Universal Pozzolanic Silica Alumina (UPSA), owner of one of the world’s largest reserves of a key ingredient in environmentally friendly concrete.
Atlas said it had signed a conditional share purchase agreement to acquire the privately held company in a deal that would see UPSA’s owners take a 97% stake in the enlarged business, with existing Atlas shareholders retaining just 3%.
The transaction, which will be settled entirely in shares, would transform Atlas into a company valued at more than £1 billion if completed.
UPSA controls the rights to extract pozzolanic silica alumina, a naturally occurring material used to make “green concrete”.
Cement production is a major source of global carbon emissions, and the use of PSA as a substitute for traditional materials has been identified as a way to reduce the industry’s environmental footprint.
The centrepiece of UPSA’s business is the Warialda Quarry in New South Wales, Australia, where it holds 99-year extraction rights to 250 million tonnes of reserves.
A new report by consultants SLR estimated an inferred resource of more than 160 million tonnes, including pozzolanic sandstone, and calculated a net present value of about £1.6 billion over a 25-year period.
Chris Chadwick, chief executive of Atlas, said: “This transaction is anticipated to transform Atlas in the near term into a £1 billion plus market cap company, delivering substantial value for Atlas shareholders and a unique proposition on the London Stock Exchange.”
He added that resources from UPSA were already attracting attention from major cement producers and were expected to be used in infrastructure projects globally.
The proposed acquisition still requires shareholder approval, regulatory clearance and publication of a prospectus before the enlarged group can be readmitted to trading in London.
Atlas said it would press ahead “as quickly as possible” but stressed there was no certainty the deal would complete.
The shares rose 39p to 49p.