Takeover target Explaurum has received a potential lifeline from fellow gold player Alkane Resources, which has agreed to inject $8 million into the hotly pursued junior.

Explaurum (ASX:EXU) is currently fending off a hostile takeover bid by gold producer Ramelius Resources (ASX:RMS).

While the cash is good for Explaurum, it also appears to be a strategic move to add another major shareholder to the register with Alkane (ASX:ALK) taking a 12.2 per cent stake.

Alkane has agreed to subscribe for around 66.7 million shares at 12c each – which is a 9.1 per cent premium to Explaurum’s closing share price on Friday.

The news sent Explaurum’s share price up to match the offer price of 12c not long after market open before it edged back slightly to 11.5c.

Alkane’s share price, however, slid over 4 per cent to 22.5c.

Explaurum's (ASX:EXU) shares gained on the news.
Explaurum’s (ASX:EXU) shares gained on the news.

Explaurum is recommending shareholders accept Alkane’s subscription over Ramelius’ takeover offer.

“The Alkane investment is a highly attractive transaction for Explaurum shareholders,” chairman Chris Baker said.

“It will provide [Alkane] with the very real opportunity to progress the Tampia project to a final investment decision in the first quarter of next year, as well as seek to drive value aggressively through the drill-bit in coming months.

“It is also struck at a premium to the implied Ramelius takeover offer price and is without any opportunistic change of control implications.”

Meanwhile, Alkane boss Nic Earner said the deal was in the works long before Ramelius tabled its offer for Explaurum.

“The Explaurum investment is an exciting opportunity for Alkane shareholders, which we have been examining for some months, well before the Ramelius offer was announced,” he told investors.

Mr Earner told Stockhead getting the deal across the line is dependent on Explaurum shareholder approval and Ramelius’ next move.

“I guess one thing that none of us know is what is Ramelius going to do now,” he said.

“But the reason why we’re attracted to Explaurum and had been looking at it for sometime is for all the reasons we described – new gold area, high exploration potential, reasonably clear path to financing – and if we can be a cooperative supportive partner given our own history in doing the same sort of things then we’re very keen to do that.

“As to how it all plays out, first hurdle is of course shareholder approval by Explaurum shareholders. They may vote it down, in which case so be it.”

This is Alkane’s second investment in an ASX-listed gold junior in as many weeks, after it agreed to sink $3.7 million into Pilbara-focused gold explorer Calidus Resources.