Takeover target Cardinal Resources has recommended shareholders vote in favour of the recently-improved proposal from Shandong Gold, which is offering to buy Cardinal for around $395 million.
Shandong Gold, which is dual-listed on the Shanghai and Hong Kong stock exchanges, has offered West Perth-based Cardinal 70 cents per listed share – up 10 cents on Shandong’s previous bid in June.
The revised offer was announced last week after competing buyer Russian-owned Nordgold upped its bid to 66 cents per Cardinal share.
Cardinal had advised shareholders should take no action towards the “unsolicited” Nordgold offer, noting commitments under a bid implementation agreement with Shandong Gold.
The Cardinal board today said shareholders should reject the Nordgold bid and accept the latest proposal from Shandong.
Cardinal is developing gold projects in West Africa, with its most developed asset being the 5.1 million ounce Namdini project in Ghana.
The company expects Namdini will generate cash of $US1.46 billion ($A2.05 billion) over a 15-year mine life.
Cardinal says the Shandong offer values the company at around $395 million on a fully diluted basis and represents a premium of around 6 per cent to Nordgold’s last bid.
Although Nordgold's offer is unconditional, the bid from Shandong – which has already sought all necessary Chinese regulatory approvals – could be satisfied within a reasonable time frame, Cardinal said.
The company noted a potential for certain shareholders to be "aggrieved by the structure of the Nordgold bid", which could also be subject to regulatory issues, particularly in Canada.
Reasons to reject the Nordgold offer were listed in Cardinal's target's statement, lodged today.
The company is being advised by BMO Capital Markets, Canaccord Genuity, Hartleys and Toronto-based Maxit Capital, while HopgoodGanim Lawyers and Calgary-based Bennett Jones are acting as legal advisers.
Cardinal was trading 2 per cent lower at 12:30pm AEST to 73 cents per share.
