Monsters of Rock: Emerald yet to hit the Bullseye

Emerald Resources has undertaken not to process acceptances on its second stab at taking full control of Bullseye Mining
Desmond Mullan, previously a player in Red 5’s attempt to snare the North Laverton Gold Project, filed a Takeovers Panel application to halt acceptances last month
Materials sector down as iron ore, lithium and gold producers struggle

Emerald Resources (ASX:EMR) is a darling of the gold space, its Okvau mine in Cambodia among the lowest cost operations globally and a major reason behind the ASX-listed producer’s quite stunning 121% surge in 2023 to a market cap of $1.57 billion.

Those metrics are 108,900oz of gold produced at all in sustaining costs of US$799/oz, somewhere around the bottom 5% of the World Gold Council’s all in sustaining cost comparisons.

It was enough to see Emerald enter the ASX 300 index for the first time in this quarter’s S&P index rebalances.

But diversification never hurts, especially when you’re operating in developing jurisdictions.

To that end Emerald has spent the past two years painstakingly trying to make the North Laverton gold project in WA’s Goldfields its own through the acquisition of the unlisted public gold company Bullseye Mining.

Only there are some big personalities at play.

A previous bid got it to around the 60% mark and involved a protracted battle in front of the Takeovers Panel with major shareholder Hong Kong Xinhe International Investment Company and Au Xingao, the latter of whom had attempted to put forward its own takeover bid for the gold miner.

That’s all settled now, prompting Emerald to make a new scheme bid endorsed by an independent committee of Bullseye Mining’s board to take its ownership stake over 75% ahead of a resource update at North Laverton later this year.

Wait just a minute, because Simon Lee’s Emerald has now been forced to make an undertaking to the Takeovers Panel that it will not process any of the acceptances it has received to date.

Why is that you ask?

It’s because one Desmond Mullan has made his return to the fray, making an application asking for a supplementary bidder’s statement and withdrawal rights to Bullseye shareholders who have accepted the Emerald offer back on August 21.

An interim order a day later restrained Emerald from processing acceptances from certain Bullseye shareholder under the current takeover bid, which is offering 1 new Emerald share for every four Bullseye shares held by investors.

The contention is that Au Xingao, Xinhe, Bullseye, its directors and Emerald are now related parties with aggregated control of the voting rights at Bullseye of 75.54%.

It’s an incredible turnaround given they’ve spent much of the past two years embroiled in litigation. That said the Melbourne Hawks was once almost a thing.

You may remember Mullan’s name from a strange takeover battle for Bullseye in 2018, initiated by King of the Hills gold mine owner Red 5 (ASX:RED).

Mullan, the father of then executive director Dariena Mullan, was going to receive 150 convertible notes to Mr Mullan to raise up to £15 million (that’s right, Pounds Sterling), along with a prepayment deed to Mullan or an associate for an option to provide $100m to Bullseye to be covered by future gold production.

The resolution on the funding was withdrawn before the Panel could make a ruling (which it did anyway) on unacceptable circumstances.

You can read that here.

Needless to say Red 5 eventually had to walk away from the confusing situation. Others haven’t.

We await the panel’s findings and to see if Emerald will, finally, be successful in taking full control of their WA gold option.

Emerald closed flat at $2.63 this arvo. A better day in the end than the ASX materials sector, which sunk at a 1.11% loss as lithum, iron ore and gold producers by and large struggled.