PERTH (miningweekly.com) – Gold miner Ramelius Resources has entered into a bid implementation agreement with fellow-listed Spectrum Metals, in a bid to acquire the high-grade Penny West gold project, in Western Australia.
Under the terms of the offer, Spectrum shareholders would receive one Ramelius share for every ten Spectrum shares held, along with a cash consideration of 1.7c a share, valuing Spectrum shares at 15c each.
The offer represented a 52% premium to Spectrum’s closing price on February 7, and a 61% premium to the company’s ten-day volume weighted average share price.
The Spectrum board has unanimously recommended that shareholders accept the offer, saying in a joint statement on Monday that through the takeover, Spectrum shareholders would become part of a profitable, financially secure Australian gold producer with a stable diversified platform of established gold mines.
“The last year has been one of exceptional growth for Spectrum, which we are particularly proud of. The Penny West gold system is developing into one of significant value, I am firmly of the view that this transaction with Ramelius will unlock the full value of Penny West for the benefit of all shareholders,” said Spectrum chairperson Alex Hewlett.
“The combination of Penny West with the existing assets of Ramelius will build a gold business capable of delivering exceptional future returns for our shareholders.”
Ramelius has told shareholders that the acquisition of Spectrum was in line with the company’s philosophy of acquiring high quality assets within a radius of existing production hubs that facilitate mining and ore haulage, without incurring significant on-site capital expenditure.
The company said that the acquisition would add a Joint Ore Reserves Committee-compliant resource of 355 500 oz to its current asset base, and would provide a near-term development opportunity to introduce an additional ore source to its processing facility at the Mt Magnet operation. This could realise potential capital cost savings and other operational synergies in the development of Penny West.
“There is clear logic in the combination of Spectrum’s assets with Ramelius’ Western Australian operations,” said Ramelius MD Mark Zeptner.
“After the successful acquisition of the Marda and Tampia Hill gold projects in 2019, Ramelius is focused on building on its growth strategy to extend mine life and maximise the value of existing infrastructure in its portfolio.
“This compelling offer is the next step in that growth strategy and is expected to provide significant benefits to both Spectrum and Ramelius shareholders,” Zeptner said.
Following the successful completion of the offer, the Ramelius board will undertake a comprehensive review to determine the optimal pathway to first cash flow from Penny West, while continuing an aggressive exploration programme at the project.