Cardinal Resources (ASX: CDV) has received a preliminary takeover proposal of $0.45775 per share from its largest shareholder UK-based Nord Gold SE (Nordgold).
According to Cardinal, the offer is non-binding and as yet, it has not received a formal offer that is capable of acceptance.
While urging shareholders to take no action at this stage, Cardinal has appointed a special purpose committee to consider international gold producer Nordgold’s correspondence.
Scooping up Gold Fields’ shares
Earlier today, Nordgold revealed it had had increased its interest in Cardinal to 19.9% by agreeing to purchase Gold Fields’ 16.6% stake at $0.45775 cash.
The purchase is scheduled to be completed by Wednesday this week.
As part of its full takeover proposal for Cardinal, Nordgold has requested access to undertake four weeks’ due diligence on Cardinal’s Namdini project
If due diligence is completed to Nordgold’s “satisfaction”, it stated it would issue a binding preliminary proposal.
Namdini gold project
Nordgold has its sights set on Cardinal’s advanced Namdini project in Ghana, West Africa.
A feasibility study on Namdini was published in October last year and revealed a 15 year mine life based on a 5.1 million ounce gold ore reserve.
The study indicated 421,000oz gold would be generated in the project’s first 12 months of production, with 1.1Moz gold expected to be produced within the first three years of full operation.
On average, gold output at the 15 year operation is expected to total 360,000oz per annum.
Over the 15-year mine life, Namdini is predicted to generate US$1.46 billion in undiscounted pre-tax cash flow based on a gold price of US$1,350/oz.
To get the project up and running capital expenditure of US$390 million is estimated with a 21-month payback period.
Based on a US$1,500/oz gold price, the payback period could shrink to 12 months.
Despite the ASX 200 and All Ords pulling back by more than 9.5% today, Nordgold’s takeover proposal for Cardinal pushed its share price up more than 40% to eventually trade at $0.35 by late afternoon.