Resources M&A activity is continuing despite market volatility

Despite the ongoing market downturn brought about by the COVID-19 pandemic, there is still substantial merger and acquisition activity in the resources sector.

Ramelius Resources (ASX:RMS) is on the home stretch for its acquisition of Spectrum Metals (ASX:SPX), with the company receiving acceptances for more than 90 per cent of SPX’s shares.

It is now moving to compulsory acquisition of the remaining shares in Spectrum that it doesn’t already own.

The company in February offered one of its shares for every 10 SPX shares and 1.7c per SPX share, valuing Spectrum at 15c, or about $208m.

Spectrum’s directors unanimously recommended the offer, which adds the high-grade Penny West gold project in Western Australia to Ramelius’ portfolio.

Penny West currently has a resource of 799,000 tonnes at 13.8 grams per tonne (g/t) gold, or 355,500 ounces of contained gold, and has further exploration potential at depth and along strike.

Ramelius plans to carry out a comprehensive review to determine the optimal pathway to first cash flow from the project upon completion of the offer.

Meanwhile, Alt Resources (ASX:ARS) has received an all-cash off-market takeover offer from private Australian company Aurenne Group Holdings.

Aurenne is offering 5.05c for every Alt share, which represents a 74 per cent premium over the last traded price of 2.9c prior to the company going into suspension late last month.

Alt’s directors say they are supportive of the all-cash offer and are giving careful consideration to the details of the offer and its attached conditions.

The company said it had been considering funding operations to meet the final vendor payments for the acquisition of the Bottle Creek gold project leases and that the takeover offer would mitigate the need for further shareholder dilution.

88 Energy (ASX:88E) and XCD Energy (ASX:XCD) have agreed to merge through a recommended takeover offer of 2.4 88E shares for every XCD share held and 0.7 88E shares for every XCD listed option, or about 1.2c per XCD share.

The share offer represents a 143 per cent premium to the 30-day volume-weighted average price of XCD’s shares, while the option offer values each XCD listed option at 0.35c, or a 116 per cent premium of all trades since they were listed on February 25.

XCD’s directors have unanimously recommended that the company’s shareholders accept the offer in the absence of a superior offer and subject to the independent expert concluding that the offer is either fair and reasonable, or not fair but reasonable.

88 Energy had previously offered 1.67 88E shares for every XCD share and 0.5 88E shares for XCD listed option in late April.

The combined company will have a diversified portfolio of three oil projects in Alaska’s highly prospective North Slope province.