PERTH (miningweekly.com) – ASX- and TSX-listed Teranga Gold has launched a takeover offer for fellow Canadian miner Oromin Explorations, offering 0.582 of its own shares for every Oromin share held.

The all-share offer represented a premium of 50% to the 20-day volume-weighted average price of Oromin shares and a premium of 68.7% to the closing price of Oromin shares on May 31.

Teranga currently holds a 13.6% shareholding in Oromin, and has secured a lock-up agreement with fellow shareholder Iamgold, securing a further 11.7% shareholding in the company.

“Our offer provides Oromin shareholders with significant and immediate value for their shares, and the opportunity to participate in the development of the Oromin Joint Venture Group (OJVG) deposits,” said Teranga executive chairperson Alan Hill.

Through the takeover offer, Teranga would acquire Oromin’s 43.5% shareholding in OJVG, and intended to work with the other JV partners to develop the deposits.

Hill said that the proposed takeover would remove near-term liquidity issues and the long-term need for significant capital expenditure from Oromin’s shareholders to advance the OJVG project, while allowing those same shareholders to own shares in a gold firm that is 100% hedge free and has the financial capacity to develop OJVG deposits from free operating cash flow.

“The combination of Teranga and Oromin would result in a combined company that is expected to have increased production from Teranga’s interest in the OJVG’s openpit reserves, higher earnings and higher free cash flow per share,” said Hill.

The OJVG reserves were estimated to host some 1.44-million ounces of gold, and would provide Teranga with the ability to blend ores from multiple deposits, which would enhance the company’s cost profile.

It would further provide Teranga with the ability to leverage its Sabodala project’s existing mill, infrastructure and mobile equipment fleet through increased production from the company’s interest in the OJVG reserves, and anticipated toll milling opportunities.

The OJVG licences are adjacent to the Sabodala gold mine.