Capricorn Metals’ largest shareholder has told suitor Regis Resources that it will not back the $85.2 million all-scrip takeover bid tabled by the gold producer.

Other investors were not happy with the news, sending Capricorn’s (ASX:CMM) share price down by as much as 21 per cent to an intra-day low of 6.4c on Monday morning.

After speculation of the deal was confirmed last week, shares rocketed over 59 per cent to a new 52-week high of 9.4c.

Regis (ASX:RRL) told investors this morning that Capricorn’s largest shareholder Hawke’s Point, which has an 18.9 per cent stake, confirmed that it will not support the proposal.

The suitor has now decided to pull its offer, which valued Capricorn at 11.4c per share.

“While Regis has no intention to initiate further discussions, it reserves its right to make a further proposal in relation to Capricorn in the future,” chairman Mark Clark said.

Capricorn Metals (ASX:CMM) shares nosedived after Regis pulled its offer.
Capricorn Metals (ASX:CMM) shares nosedived after Regis pulled its offer.

Capricorn expressed its disappointment that the deal would not go ahead.

“The board of Capricorn is disappointed that the Regis proposal cannot be progressed given that it was unanimously supported by the Capricorn board,” the company said.

“Since the Regis proposal was announced, the board of Capricorn has also received feedback from a significant number of Capricorn shareholders supportive of the proposal.”

Regis said that substantial Capricorn shareholders Nedlands Nominees and Centrepeak Resources Group both indicated their intention to support the proposal.

Capricorn says it will continue to engage with Hawke’s Point to find out what its intentions are with respect to its investment in the company.