Ramelius Resources’ (ASX: RMS) last ditch bid for advanced gold explorer Explaurum (ASX: EXU) appears to have paid off with Explaurum’s board officially telling shareholders to “accept the improved offer”.
Late last week, Ramelius put forward a revised final offer for Explaurum, which valued the company at $0.134 per share – up $0.02 on the original offer.
If Explaurum shareholders accept the off-market takeover, they will receive one Ramelius share for every four Explaurum shares, as well as $0.02 cash for every Explaurum share held.
After rejecting the previous overture, the rationale behind Explaurum’s about-face was the fact the improved offer represented a 57.6% premium to the company’s closing price of $0.085 on 12 December.
Explaurum also noted Ramelius’ new offer was a 54% premium to Explaurum’s 10-day volume weighted average price of $0.087.
With Ramelius’ stake in Explaurum currently almost 30%, Explaurum’s board advised shareholders if they don’t accept the offer, their holding could be diminished to a minority stake.
“We are very pleased with the positive response by Explaurum’s board to our improved offer and look forward to adding value to shareholders of both companies on a merged basis,” Ramelius managing director Mark Zeptner said.
As part of its acceptance of Ramelius’ bid, Explaurum has terminated the agreement with its other suitor Alkane Resources (ASX: ALK).
Under a separate arrangement, Alkane had agreed to purchase up to $8 million-worth of Explaurum shares at $0.12 each – with the duo also shaking hands over a strategic partnership.
Had this gone ahead, Alkane would have held a 12.2% stake in Explaurum.
Tug of war timeline
In September this year, Ramelius by-passed Explaurum’s board by presenting a direct takeover proposition to shareholders.
Ramelius stated it had been unable to come to an agreement with Explaurum and this was the reason for by-passing the board.
However, Explaurum responded to the initial bid with “take no action”, claiming it undervalued the company and its assets.
Putting the boot in further, Explaurum’s board said it was “surprised and disappointed” by Ramelius’ actions.
To shore up its stance against Ramelius’ unsolicited proposition, Explaurum teamed up with Alkane and officially urged its shareholders to “reject” Ramelius’ initial “inadequate” offer.
However, on Thursday last week, Ramelius upped the ante with its revised and “improved” offer.
It then followed up its revised offer by scooping up as many Explaurum shares as it could over the proceeding days pushing its stake from 4.96% in October to almost 30% by close of trade on the 17 December.
The larger stake gave Ramelius the right to appoint its own representative to Explaurum’s board.
As a result of the Ramelius’ larger stake, and revised offer, Explaurum’s board has now conceded defeat and informed shareholders it would be in their best interest to “accept” the offer.
Explaurum’s Tampia Hill gold project in Western Australia is the highly sought-after prize in this tug-of-war, with the project hosting 700,000 ounces of gold.
A definitive feasibility study is due for release shortly, with the previous feasibility estimating the project could generate life of mine free cash flow of $151 million over a 5.3-year mine life.
Due to Tampia’s proximity to its assets, Ramelius believes Tampia would complement its gold operations.
Shareholders will get to cast their vote on Friday at Explaurum’s general meeting.