Gold miner Ramelius Resources is making an all-scrip play for Explaurum that values the junior gold explorer at a 66 per cent premium to its share price before the offer was tabled.

Explaurum’s (ASX:EXU) shares shot up 42 per cent to 10.5c this morning on the news.

Ramelius (ASX:RMS), which saw its share price dip 3.2 per cent to 45.5c, told investors it planned to make an off-market offer of one Ramelius share for every four Explaurum shares held.

The offer equates to 12.3c per share, valuing Explaurum at roughly $59.2 million.

Explaurum’s Tampia Hill project is about 130km from Ramelius’s Edna May mine.

Ramelius believes there could be operational and capital cost synergies between the two operations, and the addition of the Tampia Hill project to its portfolio would maintain its exposure to ongoing exploration potential.

Explaurum (ASX:EXU) shares jumped over 40 per cent on Monday morning.
Explaurum (ASX:EXU) shares jumped over 40 per cent on Monday morning.

Explaurum told investors not to act on the offer until they had received a formal recommendation from the directors.

The company met with Ramelius last week to better understand the proposal and to explore the potential benefits of a merger.

Explaurum said Ramelius declined to provide “meaningful information” and the parties agreed to continue talks.

But it appears Ramelius has jumped the gun.

“Explaurum is surprised and disappointed that Ramelius has proceeded with its announcement before completing any meaningful engagement,” the company told investors today.

Stockhead is seeking comment from Explaurum.

But Ramelius says it has “attempted on a number of occasions” to engage with Explaurum directors to reach a good deal for both parties.

“However, we have not been able to come to an agreement so consequently, in light of the compelling nature of the offer, Ramelius has decided to put its offer directly to Explaurum shareholders for consideration,” the company said.

RBC Capital Markets mining analyst Paul Hissey says Ramelius has the financial firepower to carry out the takeover.

Ramelius has $75 million worth of cash ($95m cash and bullion) at the end of June, but Mr Hissey estimates the company’s cash position will jump to $135 million by the end of June next year.

The addition of Explaurum’s Tampia Hill project would also boost Ramelius’ reserves by 82 per cent and resources by 18 per cent.