Nusantara in $80m takeover

The board of West Perth-based Nusantara Resources has accepted a takeover proposal from a major shareholder that values the gold explorer at about $80 million.

In an ASX announcement on Monday, Nusantara said it had entered into a binding scheme implementation deed with Lion Selection Group (trading as Indika Energy) – Nusantara’s joint venture partner in the Awak Mas gold project.

Awak Mas is located near the town of Belopa, on Indonesia’s east coast.

Indika, which holds almost 50 million shares in Nusantara (equating to a 21.7 per cent shareholding) has offered to pay 35 cents for every share in the explorer that it doesn’t already own.

The offer represents a 19 per cent premium to Nusantara’s five-day volume weighted average price.

It has the full support of the Nusantara board, as well as from shareholder Cumulus Wealth.

The deal is subject to a number of conditions including the approval from Nusantara shareholders, to be sought at a general meeting expected to be held in mid-September.

Nusantara said the board considered a number of factors in its decision, including the challenges in financing a gold project in a foreign jurisdiction and continued disruptions in project development as a result of COVID-19.

The company also flagged higher capital costs for the project.

Chairman Greg Foulis said the Indika proposal solidified the value of Nusantara while de-risking the company.

“Awak Mas is at a key inflection point and the transaction removes a variety of risks associated with progressing the project from feasibility to production, including large and heavily dilutive capital raisings, exposure to gold price, jurisdictional risks and risks in relation to construction, commissioning and production,” Mr Foulis said.

The Nusantara board has unanimously recommended shareholders vote in favour of the scheme.

If approved, Nusantara and Indika are expected to merge in early October.

Taylor Collison is acting as corporate adviser to Nusantara and Gilbert + Tobin as legal adviser.

Shares in Nusantara were up 11.5 per cent at 2:43pm AEST to trade at 34 cents, implying a market capitalisation of about $70 million.