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Orion expands Curraghinalt ownership with C$1.47-a-share offer for Dalradian

21st June 2018

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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TSX- and Aim-listed Dalradian Resources on Thursday announced a recommended cash offer of C$1.47 a share by investment management group Orion Mine Finance, valuing the developer of the Curraghinalt gold project, in Northern Ireland, at C$537-million.

Under the agreement, Curraghinalt will continue to be backed by streaming firm Osisko Gold Royalties, which together with its CEO Sean Roosen and certain senior Dalradian management team members, including CEO Patrick Anderson, have indicated that they will hold on to their shares.

The remaining shareholders and Orion hold a combined 20.4% stake in Dalradian.

Dalradian, which recommended that shareholders accept the bid, said that the offer price was within the fair value market range of C$1.35 to C$1.70 a share obtained from Raymond James.

The offer is also a 62% premium to the closing price of the company’s TSX stock on Wednesday, and a 49% premium to the volume-weighted average price of its shares over the last 30 trading days.

Dalradian chairperson Jim Rutherford said that the premium offer reflected the hard work and progress of the Curraghinalt gold project, which, in less than ten years, has been transformed from a grassroots discovery to one of the world’s highest-grade gold deposits.

Anderson added that Orion and Osisko continued to show great confidence in Northern Ireland and the high-grade Curraghinalt project.

“Their goals as strategic investors are completely aligned with ours – to secure planning permission for an underground gold mine and continue advancing the project in a way that benefits all our stakeholders. We will continue to work closely with community members, all levels of government, employees, contractors and local suppliers toward building one of the world’s top gold mines,” Anderson said.

The Orion offer reportedly has strong shareholder backing, with certain funds and accounts under management by subsidiaries of BlackRock, which holds about 10.7% of Dalradian’s issued and outstanding common shares, having indicated their support for the bid.

Orion and the remaining shareholders had each also agreed to vote in favour of the transaction. The agreement is subject to approval at a shareholder meeting to be held in August and court and other approvals. The scheme will require 66.23% of shareholders to approve and simple majority percentage of shareholders after excluding any votes of Orion, Osisko Gold Royalties and certain other persons.

Orion chief investment officer Oskar Lewnowski said that the investment group was pleased to expand its ownership in “one of the world’s best undeveloped gold deposits”. “Curraghinalt gets more exciting as additional exploration and engineering work is completed, the recent positive resource update being just the latest example.”

Last month, Dalradian released an updated mineral resource statement for the gold deposit, which included a 46% increase in gold ounces contained in the measured and indicated categories and a 32% increase in inferred gold ounces, compared with the 2016 resource.

Measured and indicated resources stand at 3.07-million ounces of gold contained in 6.35-million tonnes, grading 15.02 g/t.

The resource update is expected to substantially improve the economics of the project.

A 2016 feasibility study calculated an after-tax net present value, at a 5% discount rate, of $301-million, and an internal rate of return of 24.4% at an assumed gold price of $1 250/oz. The study estimated that, over the initial ten-and-a-half-year life-of-mine, Curraghinalt will produce 1.36-million ounces of gold and 380 000 oz silver, using an average overall gold recovery of 94.3%.

Dalradian expects the updated feasibility study to deliver an increase in yearly production and a decrease in costs because of greater mining mechanisation.

Edited by Creamer Media Reporter

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