Photo by: Bloomberg
PERTH (miningweekly.com) – Gold miner PanAust has rejected an unsolicited takeover offer from shareholder Guangdong Rising Asset Management (Gram), saying on Wednesday that the offer price was inadequate.
China’s Gram in early April announced its intention to launch a takeover offer for PanAust, offering a cash price of A$1.71 for each share it did not already own.
PanAust has recommended that shareholders reject the offer, saying that the shareholder should pay more if it wished to acquire an increased ownership in the gold miner, pointing out that the company’s share price was trading above the offer price.
“While investor sentiment towards the resources sector remains variable and driven by short-term factors, at PanAust we have confidence that we have the right assets in the right commodities to drive long-term value for our shareholders,” said MD Fred Hess.
“When faced with any takeover offer, PanAust shareholders should expect the offer price to fairly reflect this long-term value potential. We believe Gram’s current offer price falls short of this level.”
Hess said on Wednesday that Gram timed the offer at a low point in the commodities price cycle, and failed to recognise the Laos business was performing strongly and was generating robust cash flows.
Furthermore, the Gram offer did not recognise the attractive medium- to long-term fundamental outlook for copper, Hess said, which was supported by a lack of new world-class deposits.
The takeover offer also failed to take into account the long-term strategic value of the Frieda River asset, in Papua New Guinea, where considerable work has already been completed and a feasibility study was progressing.
PanAust chairperson Garry Hounsell told shareholders that while the current offer was inadequate, the company was open to further engagement, and to considering all proposals which would be in the best interest of shareholders.