Mid-tier gold miner Ramelius will bail on a hostile takeover bid for junior explorer Explaurum because it couldn’t beat an alternative offer made by Alkane Resources.

Investors did not like the news, sending the Explaurum share price down over 22 per cent to 8.9c in morning trade.

Ramelius increased by 2.7 per cent to 39c, while the Alkane share price was unmoved at 20.5c.

Explaurum (ASX:EXU) told investors today that following a period of due diligence, Ramelius (ASX:RMS) couldn’t improve the terms of its offer for Explaurum, which it started pursuing in early September.

On October 29, multi commodity miner Alkane (ASX:ALK) entered the fray, offering $8 million for a 12.2 per cent stake the hotly pursued junior.

Alkane agreed to subscribe for around 66.7 million shares at 12c each – a 26 per cent premium to the implied Ramelius takeover offer of 9.5c per share.

Unlike the Ramelius offer, the Alkane transaction has no ‘change of control’ implications.

The Explaurum share price, which shot up when the takeover was first mooted in September, and has now fallen back again.
The Explaurum share price, which shot up when the takeover was first mooted in September, and has now fallen back again.

Explaurum told investors it was now focussed on implementing the Alkane transaction, which was recommended by the board as superior to the current Ramelius takeover offer.

The Alkane placement funds will be used to complete the WA-based Tampia project Bankable Feasibility Study and to “aggressively accelerate drilling across the Tampia region”, Explaurum said.

“This is expected to advance the Tampia Project to a final investment decision during the first quarter of 2019.”

The company expects to release an update on its “highly significant” Mace discovery at Tampia in the next week.