Perseus Mining and Exore Resources tie-up looks to dominate gold space in northern Cote d’Ivoire

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By Lorna Nicholas - 
Perseus Mining ASX PRU Exore Resources EXR Sissingue Bagoe gold Cote dIvoire

Exore’s 530,000oz Bagoe gold project is within trucking distance of Perseus’ Sissingue gold mine in northern Cote d’Ivoire.


Perseus Mining (ASX: PRU) is set to scoop up all the issued capital in Exore Resources (ASX: ERX) in an all-share transaction that values Exore at up to $64 million, with both companies’ boards endorsing the takeover that will result in a dominant gold landholding in northern Cote d’Ivoire.

The all-share transaction will result in Exore shareholders receiving one Perseus share for every 12.79 Exore securities held.

This will effectively give Exore shareholders 4% ownership of the combined company.

Based on Perseus’ closing price of $0.105 per share on 2 June, the parties calculate this gives Exore a fully diluted equity value of $64 million.

However, based on Perseus’ 10-day volume weighted average price of $0.98 per share, Exore’s fully diluted equity value is estimated at $59.8 million.

The valuation is a 78% premium to Exore’s 20 trading day VWAP of $0.059 and is 69% higher than Exore’s closing price of $0.062 on 2 June.

Exore managing director Justin Tremain described the takeover offer as holding “compelling value” for the company’s shareholders.

He added the deal facilitates Exore’s ability to cement the remaining 20% stake in its Bagoe and Liberty projects in northern Cote D’Ivoire giving it 100% ownership of both assets.

“A larger and financially strong partner mitigates financing risks to Exore shareholders for developing [Bagoe],” Mr Tremain explained in a conference call this morning.

Meanwhile, Perseus managing director and chief executive officer Jeff Quartermaine said the merged entity would have a “strong enterprise value” of almost $1.6 billion.

Mr Quartermaine noted Exore brings to the table more than 2,000 square kilometres of prospective land in northern Cote d’Ivoire and combined with Perseus’ assets, the resultant company would dominate the gold space in the country’s north.

Exore’s appeal

The primary appeal of Exore is its 2,000sq km of land is in proximity to Perseus own operations and tenements in West Africa.

Perseus owns the Sissingue gold operation, which is 70km from Exore’s Bagoe project.

In less than 12 months, Exore has firmed up a maiden indicated and inferred resource at Bagoe comprising 90,000oz of gold (indicated) and a further 440,000oz of gold (inferred).

The resource is shallow and high grade with the vast majority of ounces identified within 150m of surface.

Mr Quartermaine noted that Bagoe was within trucking distance of the Sissingue mill with both companies envisaging Bagoe ore could be readily transported for processing.

However, he added that Bagoe could also be developed as a stand alone operation.

“Either option provides an opportunity to continue creating value for Perseus’ shareholders … in line with fairly significant operational and capital cost savings.”

“The rationale for the transaction is quite strong,” Mr Quartermaine stated.

Northern Cote d’Ivoire

Mr Quartermaine pointed out that Perseus had substantial cash flow and experience to unlock the potential of both the company’s and Exore’s assets in the region.

“As people know we have two operating mines in West Africa,” he said, adding that Perseus’ Yaoure project in Cote D’Ivoire was also under development with an initial open pit operation estimated to have an 8.5-year mine life.

By 2022, Perseus expects to be generating 500,000oz per annum of gold at an average cost of US$850/oz, which represents “strong cash flow” with the gold price currently commanding US$1,727.37/oz.

Mr Quartermaine said Perseus will build on this through ongoing exploration at its existing operations as well the Exore tenements.

In advancing Bagoe, Mr Quartermaine said Perseus would undertake drilling to expand the resource before going through feasibility studies and securing the requisite mining leases.

Exore’s Mr Tremain told investors that in addition to Perseus’ financial liquidity and experience, the company was held in “high regard” by the Cote d’Ivoire Government, which would be beneficial in developing future resources.

He added that northern Cote d’Ivoire was “highly prospective” but an “essentially underexplored region”.

Meanwhile, Mr Quartermaine said Perseus has known for “a long time” that there’s an “awful lot of gold in the area”.

“If we can covert that to resources that’s a benefit to our shareholders going forward,” Mr Quartermaine said.

“There is enormous potential in the northern part of Cote D’Ivoire,” he added.

Advancing the tie-up

With both companies’ boards unanimously recommending the tie-up, Mr Quartermaine said the contract conditions were “very standard”.

Following an independent report, and securing shareholder and regulatory approvals, the duo anticipates the transaction will be finalised by mid-September.