Cardinal Resources’ 7-month takeover saga takes another turn

Nordgold indicates it may match Shandong Gold’s takeover offer for ASX Cardinal Resources
‘Seven months of an intense auction for control of Cardinal’
Burkina Faso hosts three Nordgold mines, Chinese gold mine near Cardinal’s Ghana projects

Russian gold company Nordgold has upped the ante in its takeover battle for ASX gold explorer Cardinal Resources (ASX:CDV) with a possible higher offer of $1.05 per share to match that of rival bidder Shandong Gold.

Cardinal Resources’ share price has tripled to $1.01 since Nordgold first made a move in March for the Africa-focused explorer with gold projects in north Ghana.

The gold explorer’s market cap has swelled to $545m after eight different takeover offers which have made Cardinal one of the hottest stocks on the ASX.

“If a higher competing offer is made, Nordgold may increase its offer price under its off-market offer, including to $1.05 per share or another price that may defeat the higher competing offer and any competing offer from Shandong,” said Nordgold on Wednesday.

Nordgold operates four gold mines in Africa – Bissa, Bouly and Taparko in Burkina Faso which borders Ghana, and Lefa in Guinea.

Listed on the London Stock Exchange, Nordgold also has four gold mines in Russia.

Takeover battle started in March

The battle for Cardinal Resources has gone on for seven months since Nordgold made its first takeover offer for the gold explorer in mid-March priced at 45.7c per share.

At the time Nordgold had acquired a 19.9 per cent stake in Cardinal, including 16.4 per cent previously held by Goldfields.

Chinese gold company Shandong Gold swooped in with a cash takeover offer of 60c per share for Cardinal in June, representing a 31 per cent premium to Nordgold’s original offer.

Chinese-owned Shaanxi gold mine is adjacent to Cardinal Resources’ Namdini gold project and its Ndongo and Bongo gold exploration tenements are near Ghana’s northern border with Burkina Faso.

A feasibility study for Cardinal’s Namdini gold project said it has an ore reserve of 5.1 million ounces.

Cardinal Resources' gold projects are in north Ghana near the border with Burkina Faso — Cardinal Resources’ gold projects are in north Ghana near the border with Burkina Faso. Image: Cardinal Resources

Back and forth moves for Cardinal Resources

There then followed a series of moves and counter moves as Nordgold and Shandong progressively offered Cardinal shareholders more and more money for their shares.

Nordgold raised its takeover offer to 66c per share in mid-July, valuing Cardinal at $347m.

Shangong Gold topped this with an offer priced at 70c per share on July 22 that was endorsed by Cardinal’s board of directors.

Nordgold appeared to be winning the battle and was Cardinal’s largest shareholder at 18.7 per cent at the end of August, according to the ASX explorer’s 2020 annual report.

FIRB approves Shandong Gold’s takeover approach for Cardinal

Shandong Gold received Foreign Investment Review Board approval for its takeover in August.

The Chinese gold miner is listed on Hong Kong’s and Shanghai’s stock markets and is 48 per cent owned by the government of China’s Shandong province.

Nordgold raised its offer price for Cardinal to 90c per share in early September and the Russian gold company by then had a 28.3 per cent stake in the ASX gold explorer.

Shandong Gold next took its takeover offer to $1 per share on September 7, and its shareholding in Cardinal had lifted to 10.67 per cent in mid-September.

In early October Shandong Gold had 11.86 per cent of Cardinal. Nordgold had a 27.8 per cent stake in late October.

Nordgold increased the price of its takeover offer for Cardinal to $1 per share on October 21, matching Shandong Gold’s price, but still Cardinal’s board preferred the Chinese company’s offer.

Takeovers Panel asked to look into tussle

After this, Nordgold asked the Australian government’s Takeovers Panel to investigate Cardinal Resources’ statements around the competing takeover offers for the company.

In particular, Cardinal’s statement on October 21 that “Nordgold has made a higher competing offer by increasing the offer price of the Nordgold takeover bid to $1 cash per share”.

Nordgold pointed to its October 21 bidder’s document that stated its $1 per share bid ‘is not a higher competing offer’.

Shandong Gold tried to clear up any ambiguity by stating October 23 that it will not increase its offer unless a higher competing offer exceeding $1 per share appeared.

At this time, 19.38 per cent of Cardinal shareholders had accepted Shandong’s $1 per share offer.

Nordgold said October 26 it will not increase its $1 per share offer for Cardinal, unless a competing offer for the company emerged.

Shandong Gold increased its offer to $1.05 per Cardinal share on October 26, and a day later Nordgold withdrew its application to the Takeovers Panel for an investigation into the takeover for Cardinal Resources.

“After more than seven months of an intense auction for control of Cardinal, Nordgold and Shandong’s best and final bid prices have increased to a 67 per cent premium to Shandong’s initial bid,” said Nordgold Wednesday.

“It is not credible to suggest that after such a protracted contest there is any reasonable prospect that a genuine third party will emerge and overbid the best and final $1 offer price,” the company added.

Until a third party bidder for Cardinal does appear at this late stage, Nordgold and Shandong Gold are left to break the deadlock.