Ramelius makes $130.7m takeover bid for Breaker Resources

Gold producer Ramelius Resources (ASX: RMS) has made a $130.7 million off-market takeover offer for Breaker Resources (ASX: BRB), which owns the Lake Roe gold project in Western Australia.

Ramelius plans to use its financial capacity and operational experience to develop Lake Roe, which is considered to be a relatively new discovery with a global resource estimate of 1.7 million ounces of gold.

It is located 50 kilometres from Ramelius’ Rebecca project, which was inherited last year following the acquisition of Apollo Consolidated.

Lake Roe is expected to provide additional scale for Ramelius through regional consolidation with Rebecca (which boasts almost 3Moz in combined resources) to support a potential new regional production hub.

Breaker’s $77.3 million cash on hand will be combined with Ramelius’ balance sheet to fund the completion of relevant studies to advance the hub.

Ramelius has a current market capitalisation of approximately $986.8 million.

All-scrip offer

Under the terms of the all-scrip offer, Breaker shareholders will receive an implied price of $0.40 per share, equating to one Ramelius share for every 2.82 Breaker shares held.

Breaker’s directors have committed to accepting the offer for their combined shares, which account for approximately 4% of the total shares on issue.

US investment funds and major shareholders Electrum and Paulson & Co have also signed pre-bid agreements to accept the offer within five days of its opening.

The companies each hold a 9.95% stake in Breaker, for 19.92% total equity.

Ramelius’ offer is conditional upon achieving more than 50.1% acceptance from Breaker.

Compelling offer

Breaker chief executive officer Sam Smith said the takeover offer is compelling.

“This is a logical and sensible combination of assets which will eventually see the Lake Roe discovery become a mine after many years of definition,” he said.

“The opportunity for Breaker shareholders to fortify their interests in Lake Roe and diversify their by joining with one of Australia’s leading and profitable gold producers is a compelling one will allow them to share in the growth and economic impetus that a new long-term regional mining hub can generate.”

Bombora prospect

Breaker’s work at Lake Roe is focused on the Bombora prospect where the majority of mineralisation has been defined over a 3km strike length.

The areas outside of Bombora are sparsely drilled and the company said “excellent potential” exists for new discoveries.

Two satellite zones have already been drilled out within granted mining leases and are referred to as the Crescent-Kopai and Claypan prospects.

Breaker controls over 600sq km of mining and exploration tenure in the region, over a strike length of approximately 50km.

Lake Roe resource estimate

In December 2021, Breaker released an updated mineral resource estimate for all three prospects at Lake Roe totalling 32 million tonnes grading 1.6 grams per tonne for 1.7Moz gold.

Bombora was reported to contain 25Mt at 1.8g/t gold for 1.5Moz; Claypan had 2Mt at 1.1g/t gold for 69,000oz; and Crescent-Kopai had 4Mt at 1g/t for 132,000oz.

The majority of the open-pittable resource was classified in the indicated category, while the majority of primary mineralisation (accessed from underground) is inferred due to drill density.

Importantly, environmental, geotechnical, hydrological and metallurgical studies completed to date do not show any impediments to development.

Large resource base

The combination of the Lake Roe and Rebecca deposits is expected to create a large mineral resource base with over 61% in the indicated category.

On completion of the takeover, Ramelius will prioritise step-out and infill drilling with a view to upgrading the inferred resource to indicated category.

The company will also complete additional studies to explore a combined development scenario with Rebecca.