Both companies revealed this morning a bid implementation agreement had been executed with Spectrum holders to receive one Ramelius share for every 10 Spectrum securities held as well as a cash component of $0.17 for each Spectrum share.
According to Ramelius, this values Spectrum’s shares at $0.15 each, which is a 52% premium to its last closing price of $0.099 on 7 February.
The offer is also a 70% premium to Spectrum’s 30-day volume weighted average price of $0.0882.
Ramelius intends to fund the cash component from its existing working capital position or an established $35 million syndicated finance agreement.
Spectrum’s board has unanimously recommended the offer, with all directors stating their intent to accept the offer for their own shares.
Penny West gold project
In acquiring Spectrum, Ramelius has got its sights set on the Penny West gold project, which is one of the highest-grade undeveloped gold assets in WA.
The project has a maiden resource of 799,000 tonnes at 13.8 grams per tonne gold for 355,500oz of the precious metal.
Within that is a higher-grade component of 569,000t at 16.8g/t gold for 306,800oz.
Ramelius anticipates there is “significant” potential to grow the resource at depth and along strike.
With Penny West about 150km from Ramelius’ Mt Magnet mining operations, it fits with Ramelius’ strategy to acquire high-quality assets within a radius of its production hub.
This enables Penny West to be mined using Ramelius’ existing infrastructure and offer potential cost savings and operational synergies.
Commenting on the acquisition, Ramelius managing director Mark Zeptner said there was “clear logic” in combining Spectrum’s assets with Ramelius’ operations in WA.
“After the successful acquisition of Marda and Tampia Hill gold projects in 2019, Ramelius is focused on building its growth strategy to extend mine life and maximise the value of existing infrastructure in its portfolio.”
“This compelling offer is the next step in that growth strategy and is expected to provide significant benefits to both Spectrum and Ramelius shareholders.”
Spectrum chairman Alex Hewlett agreed, noting he believed Ramelius will “unlock the full value of Penny West” for all shareholders.
Venus Metals Corporation claim settled
The takeover news follows the settling of Venus Metals’ (ASX: VMC) claim against Spectrum and Zebra Minerals in WA’s Supreme Court.
Venus lodged proceedings in October last year alleging Spectrum managing director Paul Adams and former director Davide Bosio had breached fiduciary duty and confidence and misused information Venus had provided to Mr Adams and Mr Bosio in their roles at DJ Carmichael regarding Venus’ proposed acquisition of Penny West.
While denying the merit of Venus’ claim, Spectrum stated it was in shareholders interest to settle the litigation.
As part of this, Spectrum has paid Venus $850,000 and Venus has now released Spectrum and Zebra from “all claims and demands” in connection with the subject matter in the litigation.
Meanwhile, Venus has moved on and is about to kick-off drilling at its 50%-owned Younmi gold project with joint venture partner Rox Resources (ASX: RXL).
The joint venture is looking for high-grade Penny West-style gold mineralisation in the same region.