Emmerson Resources (ASX: ERM) has agreed to a $311 million takeover by Pan African Resources, the parent company of Tennant Creek joint venture partner Tennant Consolidated Mining Group.
Under the terms of a scheme implementation deed, Emmerson shareholders will receive 0.1493 new Pan African shares (in the form of chess depositary interests) for each Emmerson share held, representing an implied offer price of $0.45 per Emmerson share.
The offer represents a premium of 36.4% to Emmerson’s closing share price of $0.33 on 6 March and 42.7% to the 30-day volume weighted average price (VWAP) of $0.315.
Tennant Consolidated Mining Group stands to earn a 75% interest in Tennant Creek by funding up to $10.5 million in exploration.
High-Margin Gold Exposure
On completion of the Pan African takeover, Emmerson shareholders will own approximately 4.24% of the combined group, and will have exposure to a high‑margin gold portfolio of long-life assets with resources of approximately 42.9 million ounces and a forecast production this financial year of 275,000oz gold.
Shareholders will benefit from an immediate transition from explorer to gold producer while retaining exposure to ongoing exploration and development success at Pan African’s Tennant Creek and New South Wales tenements.
Pan African has offered Emmerson an interim unsecured $5 million loan to help fund any cash calls under the Tennant Creek joint venture during the transaction.
Emmerson has appointed Treadstone Resource Partners as financial advisor and Thomson Geer as legal advisor to the deal.
Unanimous Recommendation
The Emmerson board has unanimously recommended that shareholders vote in favour of the takeover and Noontide Investments (which has 19% equity) and TA Private Capital Security Agent (6.9% equity) have confirmed their intend to do the same.
Emmerson chair Mark Connelly, who will be appointed to the board of Pan African as a non-executive director, said it was a “highly compelling and strategically logical” consolidation of the Tennant Creek tenements.
“This transaction delivers our shareholders with an immediate value realisation event at an attractive premium, while providing exposure to a larger, more diversified and well-capitalised gold producer with a broad portfolio and a strengthened platform for long-term value creation,” he said.
“We are excited about the future prospects of the combined group and the enhanced opportunities it will create for our shareholders.”
Tennant Creek Acreage
Emmerson holds over 1,800 square kilometres of land in the high-grade Tennant Creek mineral field, which has a production history of more than 5.5Moz gold and 470,000 tonnes copper from deposits including Warrego, White Devil, Orlando, Gecko, Chariot, and Golden Forty.
The company’s discoveries at Edna Beryl and Mauretania (gold) and Goanna and Monitor (copper-gold) – the first in the district for over 20 years – were found using new technology and concepts.
Emmerson is also actively exploring two early-stage gold-copper projects in NSW’s Macquarie Arc identified from 2D and 3D predictive targeting models.
The company believes they contain many attributes of known deposits within the region but that historical impediments including overlying cover (farmlands and younger rocks) have resulted in lack of effective exploration.
The Macquarie Arc hosts more than 80Moz gold and 13 million tonnes copper in areas of outcrop or limited cover.
