Nordgold makes $227m Cardinal move

Russia-based Nordgold is looking to expand its operations in Africa by making a takeover bid for Cardinal Resources after increasing its stake in the West Perth-based company to nearly 20 per cent.

The offer comes after Nordgold announced today it had acquired a 16.4 per cent interest in Cardinal, or around 81 million shares, raising its shareholding in the company to 19.9 per cent.

Nordgold subsequently made a non-binding indicative proposal to acquire Cardinal Resources, based in West Perth, for 46 cents per share in cash.

This offer values Cardinal Resources at around $227.7 million and represents an 83 per cent premium to its last closing price of 25 cents.

Cardinal shares surged 40 per cent on the news to trade at 35 cents at 10:45am AEDT.

The company appointed US-based Maxit Capital, Hartleys, BMO Capital Markets and Canaccord Genuity as financial advisers to the proposed transaction.

Canada-based Bennett Jones and HopgoodGanim Lawyers are acting as legal advisers.

Cardinal has advised shareholders should take no action on the offer at this point in time.

Nordgold acquired the 16.4 per cent interest (81 million shares) in Cardinal Resources from previous holder Corporate International Holdings – a subsidiary of Gold Fields – also for 46 cents per Cardinal share.

The purchase is expected to complete on Wednesday.

Nordgold said it was now seeking due diligence access on key aspects of Cardinal’s Namdini gold project in Ghana, West Africa, which has an ore reserve of 5.1 million ounces.

Nordgold is aiming to complete its due diligence within a four-week period.

Chief executive Nikolai Zelenski said Nordgold was committed to operating in West Africa, and had the development experience and balance sheet to bring the Namdini project into full production.

Alexey Mordashov is the principal shareholder of Nordgold with a 99.08 per cent stake