Alkane Resources is set to take an $8 million stake in takeover target Explaurum via a share placement that breaches the conditions of Ramelius Resources’ hostile bid.
Under the placement, Explaurum will issue 66.6 million shares at 12 cents each to give Alkane a 12.2 per cent stake in the gold aspirant.
Based on Ramelius’s closing share price on Friday, the implied value of its proposal is about 10.9 cents per share, or $52.5 million.
However, when the gold producer announced its proposal in September, it used a 30-day volume-weighted average price, which valued Explaurum shares at 12.3 cents each or $59.2 million.
Explaurum said today that the Alkane transaction breached a number of conditions of the Ramelius offer, including the gold explorer not issuing shares or entering into agreements regarding financing of its Tampia project.
“Ramelius may choose to waive or vary these conditions insofar as it applies to the Alkane transaction or declare its offer free of these conditions generally,” Explaurum said in a statement to the ASX.
“Ramelius could also decide to allow its offer to lapse due to breach of the conditions.
“If the offer was allowed to lapse, Explaurum shareholders would lose the opportunity to accept the Ramelius offer.”
Explaurum said it did not consider the Alkane deal a ‘frustrating action’ because the capital raising was taking place in the ordinary course of business – the company needed additional funding, and it was providing shareholders with the choice of approving the Alkane investment or accepting the Ramelius offer.
Ramelius launched an application with the Takeovers Panel last week seeking orders for Explaurum to lodge a supplementary target's statement with revised information on its Tampia project.
The Alkane placement is subject to shareholder approval, which will be sought at Explaurum’s annual meeting in December.
Explaurum said the proceeds would be used to fund exploration at Tampia, along with the completion of a bankable feasibility study for the project.
Under the deal, Alkane is entitled to appoint a director to the board.
“That is the chance to go after the potential exploration upside that the Tampia district offers.
“Explaurum directors unanimously recommend that shareholders vote in favour of the Alkane investment in the absence of a superior offer.”
Shares in Explaurum were flat at 11 cents each at 1pm AEDT while Alkane shares were off 8.51 per cent at 22 cents each.
Ramelius shares were down 0.69 per cent at 43 cents each.