Sign up Australia
Proactive Investors - Run By Investors For Investors

Explaurum surges 50% on takeover offer from Tampia Hill neighbour Ramelius Resources

Ramelius seeks to capitalise on synergies between the gold resources from Tampia Hill and the operating Edna May project.
Takeover sign
Explaurum has recommended shareholders take no action

Explaurum Ltd (ASX:EXU) is a leading ASX gainer with shares up almost 50% after fielding a takeover offer from Ramelius Resources Limited (ASX:RMS).

The company traded at an intra-day high of 11 cents after the offer of one Ramelius share for four of Explaurum, which values the target’s shares at 12.31 cents.

Explaurum, which is focused on the Tampia Hill Gold Project in Western Australia, has recommended that its shareholders take no action on the offer at this stage.

Tampia Hill near Edna May

Tampia Hill is near Narembeen, 240 kilometres east of Perth, and in close proximity to Ramelius’ Edna May operations.

In its takeover offer, Ramelius said the price offered was a 66.2% premium to the last closing price of Explaurum shares.

Ramelius believes that the “combination of the companies represents a compelling argument for mutually enhanced shareholder value”.

“Stable platform of mines”

In a statement it said: “Explaurum shareholders will become shareholders in a profitable, financially secure company with a stable platform of established Australian mines managed by a high-quality team:

- In FY18 Ramelius produced 208,118 ounces of fine gold at an All In Sustaining Cost (AISC) of $1,191/ounce and recorded a Net Profit after Tax for the Financial Year of $30.8 million;
- As at June 30, 2018, held $95.5 million in cash and gold bullion with no debt; and
- FY2019 is forecast to be another very strong year with gold production of around 200,000-220,000 ounces at an AISC of $1,150-$1,250/ounce.

READ Explaurum intersects high-grade supergene gold mineralisation at Mace prospect

Given Explaurum’s market capitalisation and the capital funding requirements for the Tampia Hill project, Ramelius said the offer reduced risks associated with remaining an Explaurum shareholder.

These include:

- Uncertainty over access to debt funding for the Tampia Hill project;
- The potential for significant shareholder dilution via a project level equity raising;
- Assuming it can be established, potential for high debt levels needing to be serviced via a single asset operation; and
- Plant design, construction, commissioning, and mining risks.

Project synergies

“The proximity of the Edna May mine to Explaurum’s Tampia Hill project provides potential to realise significant capital cost savings and operational synergies while maintaining exposure to ongoing exploration potential,” Ramelius stated.

Ramelius managing director Mark Zeptner said, “There is clear logic in the combination of Explaurum’s assets with Ramelius’ WA operations.

“After the successful acquisition of Edna May last year, Ramelius is focused on building on its growth strategy to extend mine life and maximise the value of existing infrastructure in its portfolio.

“This compelling offer is the next step in that growth strategy and is expected to provide significant benefits to both Explaurum and Ramelius shareholders.”

View full EXU profile View Profile

Explaurum Ltd Timeline

Related Articles

coffee beans
April 26 2018
The company’s focus is the Arapua fertiliser project, located about 400km south-east of Brasilia in the State of Minas Gerais, a major agro-industrial centre.
July 04 2018
The company’s goal is to be a leader in the battery metals sector, with cleaner cobalt in Australia
August 15 2018
Thunderstruck has an attractive and diverse portfolio of assets in Fiji

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use