Mungana rejects takeover offer

Mungana Goldmines has told its shareholders to reject a 13.5 cents a share takeover offer from Auctus Chillagoe, an entity led by former Karara Mining boss Steve Murdoch, saying it undervalues the company and its assets.

In a statement today, Mungana said the bid, which was lodged late last month and backed by private equity group Denham Capital, was opportunistic and materially undervalued the company’s flagship asset, the King Vol zinc deposit, at its Chillagoe project in North Queensland.

Mungana said the project’s anticipated capital expenditure of less than $40 million, a targeted date for first production in late 2016, the recent strong rise in the zinc price, and the outlook that zinc prices will continue to increase over the coming two years amid a supply shortage led to the decision to advise shareholders not to take any action in relation to the offer.

“Should you wish to dispose of your Mungana shares, you may be able to do so on-market at a higher price than that offered by Auctus,” the company told its shareholders.

Ashurst acted as legal counsel and Torridon Partners as financial adviser to Mungana.

Mungana is an offshoot of former miner Kagara Mining, which entered voluntary administration in 2012.

It was launched in 2010 as a gold spin-off but is focused on its King Vol zinc project.

Mungana shares last traded at 14.5 cents a share.