Emerald Resources inks implementation agreement for Bullseye Mining takeover

Gold explorer Emerald Resources (ASX:EMR) has signed a bid implementation agreement to acquire all shares of unlisted gold explorer Bullseye Mining.

Emerald, which has a $1.33 billion market capitalisation, already holds a 60.4% controlling interest in Bullseye and intends to acquire the remaining interest under an all-scrip off-market takeover.

Under the offer, Bullseye shareholders will receive a new Emerald share for every 4 Bullseye shares held, which values Bullseye at about $0.55 per share based on Emerald’s 30-day volume weighted average price (VWAP) of $2.18 on 25 July 2023.

Emerald reports the offer is recommended by an independent board committee of Bullseye, comprising Executive Director Peter Burns and Non-Executive Director Anthony Short, in the absence of a superior offer.  

On the basis that Emerald is a controlling shareholder of Bullseye, Directors of both companies Morgan Hart and Mark Clements have recused themselves from being involved in the assessment of the offer on behalf of Bullseye.

The company says the offer provides the remaining Bullseye shareholders with an ‘attractive’, liquid, and immediate premium for their shares, along with the opportunity to see Bullseye’s projects developed.

The offer is a ‘value-accretive’ opportunity for remaining Bullseye shareholders to become Emerald shareholders, providing exposure to producing and future development assets.

Emerald also reports consolidating Bullseye’s assets into its portfolio is a ‘logical’ step that avoids the need for ongoing pro-rata contributed funding and provides accepting shareholders with exposure to an enlarged company group profile, global investment support, and market presence.

Assuming 100% acceptance, Bullseye will become a wholly owned subsidiary of Emerald, with accepting and current Bullseye shareholders estimated to hold about 20% of Emerald’s enlarged capital structure.

Hong Kong Xinhe International Investment Company (Xinhe) and Au Xingao Investments (Au Xingao), who hold 13.94% and 0.14% of Bullseye shares, respectively, have provided Emerald with shareholder intention statements that confirm they intend to accept the offer. 

As a settlement for 5 cases in the Supreme Court of Western Australia and the District Court of Western Australia, Bullseye will issue 22.8 million shares to Au Xingao. Once the takeover deal is settled, Xinhe and Au Xingao combined will hold 18.2% of Bullseye shares.

Emerald says the offer is subject to a minimum acceptance of 75.54%. Steinepreis Paganin is acting as the deal’s Australian legal adviser, while Euroz Hartley and SCP Resources are acting as corporate advisors to Emerald. MHP Lawyers is acting as legal adviser to Bullseye.

Commenting on the deal, Emerald Resources Chairman Simon Lee says: “Today’s announcement marks a very exciting milestone for Emerald, and we’re delighted that both Xinhe and Au Xingao have signalled their intent to accept the offer for us to acquire their shares in Bullseye.

Emerald is now poised to consolidate its position as a significant gold miner with an exciting future across 2 continents”

Capitalising on the combined gold mining and exploration assets in both Cambodia and Australia, Emerald is now poised to consolidate its position as a significant gold miner with an exciting future across 2 continents.”

Also commenting, Bullseye Mining Executive Director Peter Burns says the deal represents a ‘very pleasing’ step forward for all Bullseye shareholders.

“Acceptance of the Emerald offer provides Bullseye shareholders with immediate liquidity to their investment via the ASX and eliminates any future need for those Bullseye shareholders to continue to fund the ongoing development of Bullseye assets or be subject to associated dilution.

The highly credentialed Emerald team has a strong, proven, low-cost operational track record across numerous projects”

The highly credentialed Emerald team has a strong, proven, low-cost operational track record across numerous projects and a history of delivering significant returns to shareholders. We look forward to Bullseye’s assets realigning an optimum development pathway with their input.”

Bullseye Mining is an unlisted Australian gold explorer that holds the North Laverton Gold Project and the Southern Cross Gold Project, which cover more than 1,200km-square in Western Australia.

Emerald Resources is a Perth-based gold explorer that is developing the Okavu Gold Mine in Cambodia. Since production at Okavu began in June 2021, the company has produced over 7,000kg of gold dóre.

As of 30 June 2023, Emerald had $90 million in cash and bullion at hand, according to its latest quarterly report published on 10 July 2023.

Write to Harry Mulholland at Mining.com.au

Images: Emerald Resources NL
Written By Harry Mulholland
Hailing from the Central Coast region of NSW, Harry is a passionate journalist with a background in print, radio and ESG news. When not bashing away on his keyboard, he can be found brewing a coffee or playing with his dog.