Sihayo Gold shareholder lobs all-cash takeover bid at significant premium 

A major Sihayo Gold (ASX:SIH) shareholder has made a substantial play for the Indonesia-focused explorer, tabling an all-cash offer at a 91.3% premium to the one-month volume weighted price of Sihayo shares. 

Provident Minerals, which has been an investor in Sihayo since 2013, is offering $0.00225 per share cash via the unsolicited bid. 

Based on Sihayo’s 12.2 billion shares on issue, the offer price values the company at roughly $27.5 million, with the target’s market cap currently $12.2 million.

Provident owns 31.06% and has partnered with two of its associates, Eastern Field Developments and Gavin Caudle, which respectively have 6.18% and 3.17% shareholdings in Sihayo.  

This means collectively they own a 40.41% stake, which has been vended into a special purpose vehicle – Provident Aurum.

Provident estimates the premium based on a one-month volume weighted price of $0.00118.

The proposed takeover news doubled Sihayo shares to $0.002. Nearly 7.1 million shares had changed hands this morning (30 April 2024) following the announcement.

In a statement today, Provident Aurum Director Hari Gurung says despite multiple capital raisings over many years, Sihayo has still not been able to take the Sihayo Gold Project through to development.

“Although Provident Aurum does not intend to develop the project in the near term, if it is able to secure control of Sihayo, Provident Aurum intends to conduct a broad-based review of Sihayo’s overall business at a strategic, financial, and operational level.  The review will focus on identifying opportunities for cost reduction.”

Provident Minerals says it has been an active supporter of Sihayo since 2013, having taken up its rights in all recent equity capital raisings as well as providing the recent unsecured working capital loan of US$3.9 million ($5.9 million). 

Meanwhile, Sihayo has told shareholders to take no action on the proposed offer, saying the non-associated directors will consider the terms of the offer and advise shareholders on their recommendation in due course.

Sihayo owns 75% of the Sihayo Gold Project, which hosts 24 million tonnes @ 2 grams per tonne for 1.5 million contained ounces.

If successful in its takeover bid, Gurung says Provident Aurum will try to accelerate development by allocating more resources to the project. 

“The level of activities for the project is expected to increase considerably before the development of the project becomes certain,” he says.  

Gurung argues that if Sihayo continues down the current path it will require “significantly more capital raisings and Sihayo shareholders would need to participate in any equity raisings to avoid being diluted”.

“In addition, the expenses to maintain Sihayo as a publicly listed company currently account for a material proportion of Sihayo’s total recurring expenses. 

In the event Provident Aurum is entitled to and proceeds with the compulsory acquisition of the outstanding Sihayo shares or is entitled to procure the removal of Sihayo from the official list of ASX, these expenses can be avoided and scarce cash which is otherwise allocated to meet these expenses can be redeployed to the project.”

Gurung says if the takeover is unsuccessful, Provident Aurum will undertake a review of its Sihayo investment and may explore the possibility of divesting its Sihayo shares via an on-market selldown or other means and withdrawing its financial support.

Providen Aurum says the offer price is “best and final and will not be increased”. 

The offer is subject to the suitor acquiring a relevant interest in over 50% of Sihayo shares. 

Write to Angela East at Mining.com.au 

Images: Sihayo Gold
Author Image
Written By Angela East
Managing Editor Angela East is an experienced business journalist and editor with over 15 years spent covering the resources and construction sectors and more recently working as a communications specialist handling media relations for junior resources companies.