Tug-of-war for Explaurum continues as Ramelius Resources lobs fresh takeover bid

In a last ditch attempt, Ramelius Resources (ASX: RMS) has upped the ante in its unsolicited off-market takeover bid for advanced gold explorer Explaurum (ASX: EXU).

Ramelius lobbed a revised takeover bid for Explaurum this morning that boosted its current scrip offer to $0.134 per share.

According to Ramelius, this bid is its “best and final” offer and represents a 57.6% premium to the company’s previous closing price of $0.085.

“We see our improved offer as striking an ideal balance in our desire to provide value accretive returns to shareholders of both companies as we work towards the development of the Tampia project,” Ramelius managing director Mark Zeptner said.

“We have received strong support from major shareholders of Explaurum and we are of the view that our offer represents an excellent outcome for both Explaurum an excellent outcome for both Explaurum and Ramelius shareholders,” he added.

Today’s bid follows Ramelius’ $0.123 per share offer in September when the company bypassed Explaurum’s board and went straight to shareholders.

In rationale for bypassing Explaurum’s board, Ramelius said it had been unable to come to an agreement despite repeated attempts to “engage in a dialogue”.

As a result, Ramelius said it decided to put the offer direct to shareholders for consideration in light of its “compelling nature”.

Explaurum’s response

Explaurum quickly responded to the initial bid with “take no action” saying the offer “undervalued” the company and its assets.

The company also said it was “surprised and disappointed” by Ramelius’ action, claiming Ramelius executives had “declined to provide meaningful information” during earlier discussions.

To shore up its stance against the takeover, Explaurum teamed up with Alkane Resources (ASX: ALK) in October, with the duo agreeing to a strategic alliance.

Under the strategic alliance, Alkane plans to scoop up an $8 million stake in Explaurum at $0.12 per share.

The investment would see Alkane owning 12.2% in Explaurum.

Over the following months, the saga continued to unfurl, with an independent expert report published earlier this month.

In the report, Ramelius’ initial bid was deemed “not fair and not reasonable”. As a result, Explaurum’s board told shareholders to “reject” the “inadequate” offer.

Instead, Explaurum’s board recommended shareholders accept the “superior” Alkane investment.

Tampia Hill

The centre of the tug-of-war is Explaurum’s advanced Tampia Hill project in WA, which has 700,000 ounces of gold resources.

A definitive feasibly study at the project is due for release shortly, with an earlier feasibility study estimating Tampia would have an initial 5.3-year mine life to generate life of mine free cash flow of $151 million.

Ramelius believes Tampia would offer up synergies for its nearby Edna May operation.

However, Explaurum maintains the best way forward in unlocking maximum value at Tampia is on a “stand alone development basis.”

Shareholders will be given a chance to make a decision at a general meeting next Friday (21 December).

Investors reacted positively to the news, with Explaurum’s share price rocking more than 30% to an intra-morning high of $0.115 – up from yesterday’s $0.085 closing price.

However, Ramelius’ share price had dipped more than 3% to reach $0.44 by late morning.