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Red 5 steps up Eastern Goldfields consolidation plans

19th February 2018

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

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JOHANNESBURG (miningweekly.com) - ASX-listed gold mining junior Red 5 on Monday announced that it intended to make a hostile takeover offer for all the fully-paid ordinary shares in Western Australian company Bullseye Mining.

Bullseye is an unlisted public company, whose gold portfolio includes the Laverton project, about 30 km north of Red 5's Darlot gold mine, as well as the Southern Cross gold project and the Aurora gold project.

The proposed transaction is consistent with Red 5's previously announced Eastern Goldfields consolidation strategy, given the proximity of the Laverton project to the centrally-located processing facility at Darlot. Red 5 plans to establish the Darlot mill as a central processing facility, capable of unlocking numerous undeveloped gold deposits in the region.

Red 5 said that it had written to the directors of Bullseye in December last year, but that they had not been able to initiate any meaningful engagement. Accordingly, the company announced that it would make an offer directly to Bullseye shareholders.

For Bullseye shareholders, the transaction would provide a "clear pathway" for projects to be commercialised, while reducing project development risk by gaining exposure to Red 5's existing asset portfolio and technical skills, the listed company stated.

Bullseye shareholders would be offered one fully-paid ordinary share in Red 5 for every five shares that they held, valuing the equity in Bullseye at about A$4.016-million at the current trading price of Red 5 shares.

The offer will be made by Red 5 (either directly or through one of its subsidiaries as the bid vehicle) and will be implemented by way of an off-market takeover under the Corporations Act 2001, given that Bullseye has in excess of 50 members.

The offer will be subjected to a number of conditions, including a 90% minimum acceptance condition, Australian Foreign Investment Review Board approval, as well as a number of other customary conditions including there being no regulatory action, no prescribed occurrences and no material adverse change in respect of Bullseye.

The offer extends to Bullseye shares that are issued before the end of the offer-period, on the exercise of Bullseye options or performance rights.

Additional details about the offer will be contained in Red 5's bidder's statement, which is expected to be sent in late March or April this year.

The bidder's statement will set out information for Bullseye shareholders, including how to accept the offer, the key reasons why Bullseye shareholders should accept the offer and information about Red 5.

In August last year, Red 5 announced plans to embark on a major new growth strategy in the Eastern Goldfields region after entering into binding agreements to acquire the operating Darlot mine from South African-based gold producer Gold Fields and the advanced King of the Hills project from West Australian mid-tier gold producer Saracen Mineral Holdings. The Darlot mine included a fully operational 0.83-million-tone-a-year gold processing plant, which was refurbished between 2010 and 2013 for a total cost of $17-million.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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