Ramelius Resources has launched a $59.2 million hostile takeover bid for exploration company Explaurum, which is aiming to develop its Tampia Hill gold project in the Wheatbelt.
Ramelius Resources has launched a $59.2 million hostile takeover bid for exploration company Explaurum, which is aiming to develop its Tampia Hill gold project in the Wheatbelt.
Under the scrip offer, Ramelius will exchange one share for every four Explaurum shares, leaving its shareholders with a 19.8 per cent stake in the combined entity.
The offer values Explaurum’s shares at 12.3 cents each, representing a 66.2 per cent premium on the last closing price.
The John Lawton-led company is focused on its Tampia Hill gold project, which is located 240 kilometres east of Perth.
The project is about 130km south of Ramelius’s Edna May mine, which was acquired in October last year.
Edna May is a single-pit operation feeding an adjacent processing plant.
Explaurum released a feasibility study on Tampia Hill in May, which detailed a $119 million capital cost.
Ramelius said it had attempted to engage with Explaurum on a takeover proposal, but had not been able to come to an agreement.
The gold miner said the proposal offered a number of benefits to Explaurum shareholders.
“Explaurum shareholders will become shareholders in a profitable, financially secure company with a stable platform of established Australian mines managed by a high-quality team,” the company said in a statement to the ASX.
“Given Explaurum’s current market capitalisation, and the capital funding requirements for the Tampia Hill project, the offer reduces risks associated with remaining an Explaurum shareholder.
“The proximity of the Edna May mine to Explaurum’s Tampia Hill project provides potential to realise significant capital cost savings and operational synergies while maintaining exposure to ongoing exploration potential.”
Ramelius managing director Mark Zeptner said there was clear logic for combining the two companies assets.
The Explaurum board said it had some concerns with the offer.
“The Explaurum board met with senior Ramelius executives last week to better understand Ramelius's proposal and to explore the potential benefits of a merger for Explaurum and Ramelius shareholders,” the company said.
“Ramelius declined to provide meaningful information and the meeting participants agreed that those discussions would continue.
“Accordingly, Explaurum is surprised and disappointed that Ramelius has proceeded with its announcement before completing any meaningful engagement.”
The board also said the proposal undervalued Explaurum’s underlying assets, and that the timing appeared opportunisitic.
Explaurum has told its shareholders to take no action until a formal recommendation has been put forward.
Adelaide Equity Partners is acting as Ramelius’s financial adviser to the offer, while Allion Partners is acting as its legal adviser.
Shares in Explaurum were up 41.89 per cent at 10 cents each at 1.30pm AEDT, while Ramelius shares were off 4.89 per cent at 45 cents each.
