PERTH (miningweekly.com) – Gold miner Ramelius Resources has made a takeover offer for fellow-listed Apollo Consolidated, through a recommended off-market takeover offer.

Ramelius is offering Apollo shareholders 34c a share in cash along with 0.1375 Ramelius shares for each Apollo share held, valuing Apollo’s shares at 56c each, based on the three-day volume weighted average share price of Ramelius shares up to October 15.

The offer implied an equity value of A$163-million to Apollo, and an enterprise value of A$128-million, which is a 37% premium to the enterprise value implied by the company’s three-day volume weighted average share price.

The Apollo board has unanimously recommended that shareholders accept the Ramelius offer, in the absence of a superior proposal, with the Apollo directors and management having entered into binding agreements to accept the offer for their 13.7% joint share in the company.

The two companies said in a joint statement on Monday that in addition to highly attractive premiums, the takeover offer also included a material cash component, amounting to a total of A$99-million, which would be funded from Ramelius’ existing cash reserves.

The takeover offer also provided a significant reduction in the development risk for Apollo’s Lake Rebecca project, in Western Australia where Ramelius already has two existing operations and an established workforce with strong operational and development experience.

The Lake Rebecca project has a mineral resource estimate of 29.1-million tonnes, at 1.2 g/t gold for 1.1-million ounces of contained gold, providing a potential new production center for Ramelius.

The gold miner told shareholders that Lake Rebecca represented a highly attractive opportunity to ultimately develop a greenfield mining operation in one of the world’s premier gold mining jurisdictions, and that the project’s existing 1.1-million-ounce resource provided a strong platform to pursue the commercial development of a mining operation which fitted Ramelius’ criteria in terms of scale and asset quality.

Furthermore, the geological prospectivity across the Lake Rebecca tenement package offers the potential to continue expanding the existing mineral resource estimate, with a view to both expanding any future operation or significantly extending mine life.

“Lake Rebecca is an outstanding opportunity for Ramelius to add a key growth asset to its portfolio of producing assets at Mount Magnet and Edna May. The Apollo team has done an excellent job advancing Lake Rebecca to its current stage of development and have clearly demonstrated its potential for development into a high-quality gold mine in a tier-one gold mining jurisdiction,” said Ramelius MD Mark Zeptner.

“Subject to the offer being successful, Ramelius is looking forward to ramping up the drilling programme across the tenement package to expand the existing resource and ultimately developing Lake Rebecca into a cornerstone producing asset within our portfolio. Our strategic target for the project is to identify a pathway to a mine life of 10 years at a run rate of at least 100 000 oz/y.

“We also look forward to welcoming Apollo shareholders as Ramelius shareholders and encourage Apollo shareholders to accept the Offer as soon as possible.”

Apollo MD Nick Castleden told shareholders that the offer followed a period of significant corporate interest in Apollo and delivered an excellent result for shareholders who, over the years, had seen Lake Rebecca transition from a greenfield exploration play to its status as a potential future standalone, long-life production asset.

“Ramelius brings excellent credentials in the business of taking new gold projects online and has ample experience, personnel, and funding to take the project forward. Lake Rebecca is clearly an excellent fit for Ramelius’ 250 000 oz/y production profile, and the Ramelius shares that Apollo shareholders will receive offer the stability of a multi-project production house while maintaining exposure to the upside as Lake Rebecca progresses along the path to development.

“The offer provides compelling value to shareholders with the circa 60% cash component providing value certainty plus equity in a proven and well respected West Australian gold miner. We look forward to joining Ramelius’ existing shareholders to participate in the next stages of the journey.”

The takeover offer is subject to a number of conditions, including a 90% acceptance by Apollo shareholders, as well as regulatory approvals.