Explaurum’s (ASX: EXU) board has responded to Ramelius Resources’ (ASX: RMS) unsolicited takeover offer this morning by advising shareholders to “take no action” and saying the offer “undervalued” the company.
At market open this morning, Ramelius bypassed Explaurum’s board and lobbed an all scrip takeover offer for Explaurum that valued the company at $0.123 per share.
In its offer, Ramelius stated it had attempted to engage in a dialogue with Explaurum’s board but had been unable to come to an agreement.
As a result, Ramelius put its offer direct to Explaurum shareholders, claiming it was “compelling”.
However, Explaurum has responded by saying Ramelius executives had “declined to provide meaningful information” at a meeting between the companies last week and that the parties had agreed discussion would continue.
“Accordingly, Explaurum is surprised and disappointed that Ramelius has proceeded with its announcement before completing any meaningful engagement,” Explaurum stated.
The company added that the proposed consideration was “inadequate” and “undervalued” its underlying assets and future prospects.
“The timing of the offer appears opportunistic timed to take advantage of the current share price before Explaurum completes its bankable feasibility study and provides that information to the market,” Explaurum explained.
Explaurum also noted that Ramelius’ proposed scrip consideration did not bring the same certainty or risk profile as a cash proposal with appropriate due diligence and valuation.
As a result, Explaurum has advised its shareholders to “take no action” until its directors had decided on a formal recommendation and provided rationale behind the verdict.
Tampia Hill gold project
Explaurum’s flagship asset is the Tampia Hill gold project about 14km from Narembeen in WA’s wheatbelt.
A feasibility study was delivered in May that estimated an initial 5.3 year mine life to produce 490,000 ounces of gold for life of mine free cash flow of $151 million.
The study assumes capital costs of $119 million and all in sustaining costs of $998/oz.
Explaurum is hoping to bring Tampia online by 2020.
This morning’s news pushed Explaurum’s share price up almost 50% to reach $0.11 by midday.