Mungana bid "unfair": Expert

An independent expert’s report has found private equity group Auctus Chillagoe’s takeover bid for Mungana Goldmines to be both unfair and unreasonable, saying the 13.5 cents a share price was opportunistic and undervalued the business.

The report, which was undertaken by Grant Thornton, assessed the fair market value for Mungana shares as between 24.2 cents and 31.7 cents – around double what Auctus, an entity led by former Karara Mining boss Steve Murdoch, had offered.

“The offer price is at a discount between 44.2 per cent and 57.4 per cent compared with the low end and high end of our valuation range of Mungana on a 100 per cent and control basis,” the independent expert said.

“Mungana shareholders accepting the takeover offer will forgo the opportunity to participate in the potential near-term growth prospects of the company and they will receive less than fair market value for their shares.”

Mungana’s board recommended shareholders reject the offer earlier this month under the belief that the deal undervalued the company, its Queensland mineral assets and their potential tho generate growth for the company’s shareholders.

Meanwhile, Mungana has raised about $5 million through a placement of 36.1 million shares, at 14 cents each, to institutional and sophisticated shareholders, including directors John Fitzgerald, Tony James and Rick Yeates.

The company plans to use the funds to progress drilling and complete a feasibility study on its King Vol zinc project in Queensland.

Mr James, who is managing director of Mungana, said the calibre of the participants in the raising reflected the real potential of the King Vol project and strong support for the project to succeed.

“The project has high-grade zinc and an estimated pre-production capital cost that is less than a greenfield’s project by comparison due to the key plant components and major infrastructure already in place for this project,” Mr James said.

“This raising ensures Mungana is now fully funded through to the completion of the feasibility study, which is scheduled for March next year.”

Petra Capital acted as lead manager to the placement. 

Mungana shares were 13.7 per cent higher to 16.5 cents each at 12:45pm.