Musgrave rejects Westgold takeover

Gold junior Musgrave Minerals has knocked back Westgold Resources’ $177 million merger proposal, telling shareholders to reject what it has called an ‘opportunistic’ offer from the mid-tier explorer and miner.

The Wayne Bramwell-led goldminer offered Musgrave shareholders one Westgold share for every 5.37 they hold, in a deal that prices the target at about $177 million, or 30 cents per share, on June 6.

Westgold issued and dispatched its supplementary bidder’s statement urging investors to accept the offer late last week.

Musgrave’s board has waited just over three weeks to make its recommendation, this morning advising that its directors had unanimously resolved to reject the deal and urged shareholders to do the same.

In knocking back the offer, Musgrave said Westgold’s offer price had fallen below the target’s share price and also pointed to what it said had been opportunistic timing on Westgold’s part.

Westgold’s offer came months after Musgrave tabled a stage one prefeasibility study outlining plans to construct a 500,000 tonnes per annum processing plant for about $121 million to service the proposed 345,000 ounce mine.

“As at 23 June 2023, the last practicable day prior to the release of this letter, the Musgrave share price closed at $0.295 compared to the current Westgold implied Offer price of $0.250,” Musgrave said.

“Musgrave’s control of the Cue gold project delivers immediate value to Westgold.

“The Cue gold project displaces low-grade ore, defers capex and accelerates production milestones for the benefit of Westgold shareholders.

“Musgrave shareholders should not hand over project control by accepting Westgold’s offer.”

The Musgrave board, which owns about 2.43 per cent of the company, is due to issue a target’s statement in the coming weeks. 

Westgold's proposal comes with a 50.1 per cent minimum acceptance. 

Of interest to Westgold is Musgrave’s flagship Cue project, located in Western Australia’s busy Murchinson province.

NSW-based miner Evolution Mining has a 75 per cent stake in part of the Cue project.

Also close by is Ramelius Resources, which operates the Mt Magnet goldmine south of Cue.

To the west of Cue is Gascoyne Resources' Dalgaranga outfit, which was put under care and maintenance in November 2022.

Westgold previously attempted to acquire Gascoyne in a $120 million takeover in 2021 but was unsuccessful. 

Musgrave has appointed Longreach Capital as its financial adviser and Thomson Geer as legal adviser. In Westgold's camp is Argonaut PCF and law firm DLA Piper.

Musgrave Minerals shares closed the day higher by 1.72 per cent at 30 cents, meanwhile Westgold Resources shares were off 2.78 per cent to trade at $1.40.