20/06/2016 - 10:28

Gryphon accepts $86m takeover

20/06/2016 - 10:28

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A Canadian gold miner has entered into an agreement to acquire Subiaco-based explorer Gryphon Minerals, in an all-scrip deal worth $86 million.

Gryphon accepts $86m takeover
Teranga owns and operates its Sabodala gold mine in Senegal, West Africa.

A Canadian gold miner has entered into an agreement to acquire Subiaco-based explorer Gryphon Minerals, in an all-scrip deal worth $86 million.

Teranga Gold, an Ontario-based miner listed on both the ASX and the TSX, will exchange each Gryphon share for 0.169 of either a Teranga chess depository interest or common share.

The deal values Gryphon shares at 20.6 cents each, a 45 per cent premium to its 20-day volume weighted average price, and the company at $US63 million ($A86 million).

Teranga would issue about 70.1 million shares if the deal is successful.

Teranga owns and operates its Sabodala gold mine in Senegal, West Africa, which has been in operation since 2009, while Gryphon’s core asset is a 90 per cent stake in the Banfora gold project, also in West Africa.

Gryphon managing director Stephen Parsons said the deal would create a West Africa-focused mid-tier gold producer.

“This transaction gives an immediate uplift for Gryphon shareholders and provides significant exposure to Teranga’s Sabodala gold mine in Senegal,” he said.

“The combined company can leverage off its strong balance sheet and mining cash flows to help bring the 3.6 million ounce Banfora gold project into development and production in the near term.

“The combination of the companies provides a great opportunity to leverage off the skill sets of both groups with Teranga’s mining and development team and Gryphon’s expertise and social licence to operate in Burkina Faso as well as its excellent track record on exploration and discovery.”

Teranga chief executive Richard Young said the acquisition was an opportunity to add a second high-quality gold asset to the company’s asset base.

"Banfora provides excellent optionality with attractive economics over a variety of development scenarios along a highly prospective land package which we intend to purposefully explore,” he said.

“Banfora’s similar mining characteristics to Sabodala allow us to leverage our experienced mine construction and operating teams with Gryphon’s mine development and exploration teams to successfully develop and operate the new mine.

“Adding Banfora to our low-cost Sabodala operation should position Teranga to produce around 300,000oz per year with all-in sustaining cash costs below industry average.”

The deal has been unanimously approved by the boards of both companies, with Gryphon directors recommending the company’s shareholders vote in favour of the transaction.

The acquisition is expected to be completed by October.

Maxit Capital acted as financial adviser to Gryphon, with King & Wood Mallesons acting as Australian legal counsel.

DLA Piper acted as Australian legal adviser to Teranga.

Gryphon shares were 25.9 per cent higher to 17 cents each, while Teranga shares were 2.8 per cent lower to $1.18 each, at 10:30am.

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