Photo by: Bloomberg
PERTH (miningweekly.com) – ASX-listed Explaurum has urged shareholders not to take any action regarding a hostile takeover offer from gold miner Ramelius Resources.
Ramelius on Monday launched an all-scrip bid for Explaurum, offering one of its own shares for every four Explaurum shares held, valuing the takeover target’s shares at 12.3c each.
The offer represented a 66.2% premium to Explaurum’s closing price on September 7, and a 59.7% premium to the company’s ten-day volume-weighted average price, as well as a 50% premium to its 30-day volume-weighted average price.
Shares in Explaurum traded 42% higher at 10c each on Monday, while Ramelius’ stock fell by 4% to 0.45c a share.
Ramelius told shareholders that the combination of the two companies represented a compelling argument to mutually enhance shareholder value, pointing out that the proximity of Ramelius’ Edna May operation to Explaurum’s Tampia Hill project provided potential to realise significant capital cost savings and operational synergies, while maintaining exposure to ongoing exploration potential.
The gold miner also pointed out that with the takeover, Explaurum shareholders would become part of a “profitable, financially secure company with a stable platform of established gold mines”, while also reducing the risks associated with funding the development of the Tampia Hill project.
“There is clear logic in the combination of Explaurum’s assets with Ramelius’ Western Australian operations. After the successful acquisition of Edna May last year, Ramelius is focused on building on its growth strategy to extend mine life and maximise the value of existing infrastructure in this portfolio,” said Ramelius MD Mark Zeptner.
“This compelling offer is the next step in that growth strategy and is expected to provide significant benefits to both Explaurum and Ramelius shareholders.”
Ramelius has previously attempted to engage with the Explaurum directors in an effort to jointly explore a recommended deal; however, since no agreement could be reached, the gold miner took the decision to present a takeover offer directly to Explaurum’s shareholders.
Explaurum raised a number of concerns regarding the Ramelius offer, saying that despite requests from its board, Ramelius had declined to provide meaningful information that would have allowed the takeover target to better understand its proposal and to explore the potential benefits of a merger.
Explaurum said that the proposed consideration was inadequate and undervalued the company’s underlying assets and future prospects, while the timing of the offer appeared opportunistic to take advantage of the company’s current share price before the completion of a bankable feasibility study on the Tampia Hill project.
The company also noted that the proposed scrip consideration did not provide the same certainty of value or risk profile as a cash consideration, and would require careful due diligence and valuation.
The offer is subject to a number of conditions, including the gold price not falling below A$1 350/oz.