Saracen Mineral Holdings (ASX: SAR) has announced that it has entered into a Bid Implementation Deed to acquire all of the shares of Australian gold exploration company Bligh Resources Limited.
The takeover offer is aimed at the amalgamation of Bligh’s Bundarra gold project with Saracen’s Thunderbox operations which are only 30km apart.
SAR reported that under the 100% scrip consideration, the shareholders of Bligh will be issued 0.0369 Saracen shares for every 1 Bligh share.
This translates to Bligh shares at 12.8c per share and the Company at $38.2m. The Offer represents a 97% premium to Bligh’s closing share price of 6.5c on 13 June 2019.
Bligh’s Directors and major shareholder Zeta Resources reported that they will accept the Offer in absence of a superior proposal.
Interestingly, the offer represents value for both Saracen and Bligh shareholders. Saracen would receive additional near-term development opportunities to further enhance the Thunderbox operations, while Bling would have a fair value for an illiquid stock, as well as pathway to production for the asset.
The company said that the Offer consideration is final and will not be increased.
Thunderbox project
Saracen’s Thunderbox Operations are centred on the Thunderbox Open Pit and CIL gold treatment plant located 45km south of the town of Leinster in Western Australia.
Thunderbox mineralisation is hosted in an intermediate intrusive porphyry, in the hangingwall of the Thunderbox Shear Zone.
Bundarra project
Bundarra is Bligh’s only project. It is located less than 30km south of Saracen’s Thunderbox project, and adjacent to the sealed Goldfields Highway.
Bundarra consists of five mining leases and six prospecting licences that host four known gold deposits. The project has JORC-compliant Resources of 9.7Mt at a grade of 2.1g/t for a total of 660,000oz of gold.
Saracen’s takeover offer
Saracen reported that it has made an off-market takeover offer to acquire Bligh Resources. It may be noted that Saracen’s initial takeover offer of A$8.5 million for Bligh Resources was rejected two years ago.
With this new $38.2m deal, Saracen is eyeing Bligh’s 660,000 oz pre-development Bundarra project near its Thunderbox operation.
Terms of the bid
Under the Bid, Bligh shareholders will receive 0.0369 Saracen shares for every one (1) Bligh share, valuing Bligh at 12.8c1 per share and the Company at $38.2 million.
The Offer represents a premium of 97% to the last closing price of 6.5c on 13 June 2019 and 97% to Bligh’s one-month VWAP of 6.5c.
The company reported that the Offer consideration is final and will not be increased.
Offer conditions
Saracen said that the Offer is subject to a number of conditions, the full list of which is set out in the Bid.
The important conditions includes 90% minimum acceptance by Bligh shareholders; No material adverse change in relation to Bligh or Saracen; No prescribed occurrences in relation to Bligh; All applicable regulatory approvals being obtained; and No breach by Bligh of the conduct of business restrictions or Bligh warranties in the Bid.
The company said that the Bid contains customary deal protection mechanisms including “no shop”, “no talk” and “no due diligence” restrictions as well as notification and matching rights in the event of a competing proposal.
Saracen said that a break fee may also be payable from Bligh to Saracen in certain circumstances.
SAR reported that the Offer extends to all Bligh shares that are issued as a result of the exercise of options during the offer period. Saracen may also provide a working capital facility of up to $100,000 to Bligh during the offer period.
Board, shareholder endorse offer
Bling reported that its Board of Directors unanimously recommend to shareholders that they accept the Offer, in the absence of a superior proposal.
Each Bligh Director intends to accept the Offer with respect to all Bligh shares owned or controlled by them (3.43%), in absence of a superior proposal, subject to the terms of the Bid.
Bligh’s major shareholder Zeta Resources Limited, representing 85.03% of the shares, has also indicated it intends to accept the Offer in absence of a superior proposal.
Next steps
Saracen said that the detailed information relating to the Offer will be set out in the Bidder’s Statement and Target’s Statement, which are expected to be dispatched to Bligh shareholders in late June / early July 2019.
Meanwhile, Saracen has appointed PwC as legal counsel and financial advisor.
Management comments
Saracen Managing Director Raleigh Finlayson said: “The Offer makes sense for both companies. Saracen’s infrastructure at our nearby Thunderbox operations means we can unlock the value of Bundarra and this is reflected in the share price premium we have offered to Bligh shareholders”.