Indika takeover bid values Nusantara at $80m

Nusantara’s board has unanimously recommended an all-cash 35c per share takeover offer from its Indonesian partner Indika Energy that values the company at about $80m.

The offer, which represents a 19% premium to the five-day volume weighted average price of the company’s shares, will grant Indika – already a major shareholder of Nusantara – control over the remaining 75% of the advanced 2.28moz Awak Mas gold project in Indonesia.

Nusantara Resources’ (ASX:NUS) board committee had recommended the offer for the 165,641,107 outstanding shares subject to an independent expert report concluding that the transaction is in the best interests of all shareholders and the absence of a superior proposal.

Shareholders representing 26.7% of NUS shares on issue have already flagged their support for the offer.

The company advised shareholders to consider the potentially higher capital cost of Awak Mas compared to its 2020 update as well as its potential funding obligations for front-end engineering and design (FEED) work incurred to date (up to $US15m on a 100% basis).

“The Indika proposal was welcomed by the independent directors and comes at an opportune time for NUS shareholders to crystallize value and de-risk their investment in the company,” chairman Greg Foulis said.

“Awak Mas is at a key inflection point and the transaction removes a variety of risks associated with progressing the project from feasibility to production, including large and heavily dilutive capital raisings, exposure to gold price, jurisdictional risks and risks in relation to construction, commissioning and production.”

FEED update

Besides the FEED and independent review flagging an increase in capital costs, Nusantara has also reached an umbrella services agreement with Petrosea that covers an agreed scope of services to ensure continued progression of Awak Mas.

As part of this agreement, Masmindo, which is overseeing the FEED process, has agreed to extend the time to conduct additional work to complete the FEED and negotiate engineering, procurement and construction arrangements with Petrosea.

Awak Mas hosts an ore reserve of 35.6 million tonnes grading 1.33 grams per tonne (g/t) gold for 1.53Moz of contained gold contained within a broader open pit indicated and inferred resource of 51.3Mt at 1.39g/t gold for 2.28Moz of contained gold.

This article was developed in collaboration with Nusantara, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.