ASX-listed gold miner Ramelius Resources has made a $60 million all scrip, off-market bid for Explaurum with the takeover target’s board urging its shareholders to take no action.
The offer of one Ramelius share for every four Explauraum shares values Explaurum shares at 12.3c each – a 66.2% premium to Explaurum’s last closing price of 7.4c on September 7. Explaurum owns the Tampia Hill project in Western Australia.
Ramelius has talked up the benefits of the deal, saying combination the two companies will see Explaurum shareholders “become shareholders in a profitable, financially secure company with a stable platform of established Australian mines managed by a high-quality team”.
According to Ramelius, the offer reduces risks associated with remaining an Explaurum shareholder specifically uncertainty over access to debt funding for Tampia Hill, the potential for significant shareholder dilution via a project level equity raising and plant design, construction, commissioning, and mining risks.
The acquisition of Tampia Hill also provides Ramelius with potential for increased flexibility around the timing and scheduling of mining operations at Edna May.
Explaurum shareholders are tipped to benefit from having access to cash flow generating assets at Edna May, Mt Magnet and Vivien, while remaining exposed to Tampia Hill.
Once taking control of Explaurum, Ramelius will undertake a comprehensive strategic review, which has the potential to determine alternate, quicker paths to first cash flow from Tampia Hill.
There is clear logic in the combination of Explaurum’s assets with Ramelius’ WA operations,” Managing Director Mark Zeptner said.
“After the successful acquisition of Edna May last year, Ramelius is focussed on building on its growth strategy to extend mine life and maximise the value of existing infrastructure in its portfolio.
This compelling offer is the next step in that growth strategy and is expected to provide significant benefits to both Explaurum and Ramelius Shareholders.”
The board of Explaurum have advised its shareholders to take no action in relation the offer.
A bidder’s statement will be sent to Explaurum shareholders by late September.
Shares in Ramelius were trading 2c lower at 45c while Explaurum shot 3.6c, 50%, higher to 11c at noon on Monday.