Photo by: Bloomberg
PERTH (miningweekly.com) – Gold developer Bullabulling Gold on Tuesday told shareholders to hold off on selling their shares to fellow-listed gold miner Norton Gold Fields.
On Thursday, Norton launched an all-cash takeover offer for Bullabulling, offering shareholders 7c a share for each share held. The offer represented a 30% premium to the company’ share price on April 17, and a 32% premium to the three-month volume-weighted average price.
Norton CEO Dianmin Chen said that Bullabulling’s namesake project, in Western Australia, had significant funding challenges, which a small company such as Bullabulling would have ongoing difficulties managing. The project is expected to cost about A$300-million to bring to production.
“By accepting the offer, Bullabulling shareholders will remove their exposure to these major financing risks and the likely continued dilution in the value of their shareholdings,” he added.
However, Bullabulling said on Tuesday that the offer price from Norton did not adequately reflect the value of the Bullabulling asset, or of the company itself, and as such did not justify a change in control.
The Bullabulling directors would review the offer, but told shareholders to take no action until a formal response to the offer was made.
A definitive feasibility study on the Bullabulling project would be completed before the end of the year, and gold production at the operation was expected to average 175 000 oz/y over an initial 13-year mine life.