Ramelius sweetens Explaurum takeover with cash offer; shares jump 18pc
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Ramelius Resources is offering Explaurum a sweetener to get its takeover across the line.
Explaurum (ASX:EXU) told investors this morning that Ramelius (ASX:RMS) would add 5c cash per share to its original offer of one Ramelius share for every four Explaurum shares held.
The new deal values Explaurum at about 15.25c per share, or $73.4m.
Investors liked the news, pushing shares up over 18 per cent to 13c on Monday morning.
Explaurum said the new bid was nearly 49 per cent higher than the initial offer.
The offer is also a 27.1 per cent premium to the buy-in price Alkane Resources (ASX:ALK) agreed to pay in October for a 12.2 per cent stake in Explaurum for $8m, or 12c a share.
Ramelius’ increased offer has prompted Explaurum to reconsider and agree to let the suitor undertake a “limited period” of due diligence over the Tampia gold project.
However, Explaurum did stress that the revised proposal is incomplete and still subject to ongoing talks between the two companies.
“We’re making no recommendation towards it at the moment to our shareholders,” Explaurum boss John Lawton told Stockhead.
“We’re obliged to provide due diligence and we’re doing it on an agreed basis. We don’t think we’ve got anything to worry about there, so we’ll see where the discussions go, but there’s a number of issues to be resolved obviously and that’s why it’s indicative.”
Mr Lawton said the due diligence period was 10 days, but he would like it to be completed more quickly so Explaurum can get on with work at its Tampia project.
Explaurum’s Tampia Hill project is about 130km from Ramelius’s Edna May mine in Western Australia.
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.
Meanwhile, Explaurum said Alkane had confirmed that it would not trigger the termination of its subscription agreement or call in the break fee just because Explaurum is engaging with Ramelius and providing due diligence.
Alkane has already given Explaurum $800,000 of the placement cash.
If Explaurum recommends shareholders accept the new Ramelius deal instead, the company will have to repay the $800,000 plus a break fee of $400,000.
Alkane can pull the pin on the deal if Explaurum recommends a competing proposal and if acceptances under the current Ramelius offer reach 30 per cent.
Explaurum is still recommending shareholders reject the current “inadequate” takeover offer.
The Australian government’s Takeovers Panel, meanwhile, has decided not to intervene in the takeover battle.
Ramelius’s submission to the Panel in October alleged that Explaurum undervalued its September offer in statements that were not “soundly-based or reasonable”.
It also said Explaurum’s valuations of Tampia were not “objectively reasonable”, and that its statement contains a number of “misleading statements”, according to the submission.
But the Takeovers Panel said that following discussions with Explaurum, the company agreed to commission an independent expert’s report before the close of Ramelius’ offer and had also retracted statements “relating to reserve contributions which the Panel considered were misleading”.