Perseus Mining Ltd (ASX:PRU, TSX:PRU, OTC:PMNXF) intends to make an off-market takeover for all of the issued shares in fellow African-focused gold company OreCorp Ltd that it does not already own for cash consideration of A$0.55 per share.
This offer to OreCorp’s shareholders is valued at a 4.0% premium to the currently implied value of a takeover offer made by Silvercorp Metals Inc (TSX:SVM, AMEX:SVM), as announced to the ASX on December 17, 2023, and as amended on January 16, 2024.
The Perseus offer implies a total OreCorp equity value of approximately A$258 million.
Pre-development gold project
OreCorp is an emerging mineral development company listed on the ASX with its key project being the pre-development Nyanzaga Gold Project in northwest Tanzania for which a Special Mining Licence (SML) was granted on December 13, 2021, with results of a definitive feasibility study released in August 2022.
Unlike the Silvercorp takeover, Perseus’ offer provides OreCorp shareholders the certainty of receiving a cash payment equal to 100% of the stated value of the consideration for their shares.
“A compelling opportunity”
Perseus’ executive chairman and CEO Jeff Quartermaine said: “Perseus has put this new offer directly to OreCorp shareholders on the basis that it represents a compelling opportunity for the shareholders of both OreCorp and Perseus.
"The acquisition of OreCorp’s shares aligns with Perseus’ growth strategy of building an asset portfolio comprised of geopolitically diverse, high-quality gold assets located on the African continent.
"At the same time, this offer is demonstrably superior to the Silvercorp takeover in terms of price, based on recent Silvercorp trading, and in terms of consideration certainty, being an all cash.
"In other words, it would ensure that OreCorp’s shareholders receive full value and certainty for their shares in OreCorp.”
Perseus holds 19.9%
Perseus was able to secure 19.9% of OreCorp’s shares at a price of $0.525 in November 2023, with a key driver for many of the sellers of OreCorp shares being a preference for cash consideration as opposed to Silvercorp shares if Silvercorp was successful.
Perseus, which has a market capitalisation of approximately A$2.45 billion, operates three gold mines in West Africa, including Yaouré and Sissingué in Côte d’Ivoire and Edikan in Ghana and has been preparing for the development of a fourth mine (Meyas Sand Gold Project) in Sudan.
In FY2023, the company produced more than 535,000 ounces of gold at a weighted average AISC of approximately US$960 per ounce.
The OreCorp offer will be funded from Perseus’ existing cash and bullion reserves which amounted to US$594 million as at September 30, 2023.
Full details of the Perseus offer will be contained in a bidder’s statement that is expected to be lodged with ASIC, provided to OreCorp and released to the ASX prior to the end of January 2024.
The conditions of the Perseus offer are materially the same as those of the Silvercorp takeover, including being conditional on acquiring 50.1% of OreCorp ordinary shares.
“Has the capacity”
"Perseus has the financial capacity, technical expertise and in-country relationships required to optimally develop OreCorp’s Nyanzaga Gold Project and bring the gold mine into production,” Quartermaine said.
"This development would enable Perseus to continue to deliver on its corporate mission of creating material benefits for all of our stakeholders, including the Government and people of Tanzania.
"If the acquisition is completed, Perseus will have three operating mines producing gold at a rate of over 535,000 ounces per year in FY2023 and two high-quality development projects that, when brought on stream, as intended, will enable Perseus to maintain or exceed that targeted production level well into the next decade.”
OreCorp shareholders who accept the Silvercorp takeover will be unable to accept the Perseus offer.
Perseus intends to submit its requisite approval forms to relevant Tanzanian Government agencies for this transaction early this week. The company has recently met with the Government, and based on these discussions does not foresee any challenges in obtaining the requisite approvals in a timely manner.
Perseus is being advised by Sternship Advisers and Euroz Hartleys as financial advisers and by Corrs Westgarth Chambers as Australian legal counsel.