04/06/2014 - 10:55

Papillon attracts $615m takeover

04/06/2014 - 10:55

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Perth company director Ian Middlemas has presided over another lucrative takeover deal, after the board of Africa-focused Papillon Resources agreed to a $615 million all-scrip takeover by Canadian major B2Gold.

Papillon attracts $615m takeover

Perth company director Ian Middlemas has presided over another lucrative takeover deal, after the board of Africa-focused Papillon Resources agreed to a $615 million all-scrip takeover by Canadian major B2Gold.

The main attraction for B2Gold is Papillon's Fekola gold project in Mali.

The two companies have entered into a definitive merger agreement under which B2Gold will acquire Papillon, with Papillon shareholders receiving 0.661 B2Gold shares for every Papillon share held.

The offer translates to a purchase price of about $1.72 per Papillon share, representing a 20.6 per cent premium to the company's last closing price.

Papillon's board of directors, led by Mr Middlemas as chairman, has unanimously approved the takeover bid in the absence of a superior scheme, pledging to vote in favour of the deal when it goes before shareholders for approval in early September.

Mr Middlemas is one of the most prolific deal makers in the local market, perhaps best known for the $1.02 billion takeover of uranium stock Mantra Resources in 2011.

Soon after that deal, he joined the board of Papillon as chairman.

TSX-listed B2Gold has three operating mines in the Philippines and Nicaragua, which collectively produced 366,000 ounces of gold in 2013 at an all-in sustaining cost of $C1,064 ($1,050) per ounce.

The merged entity plans to focus on development of Papillon's Fekola gold project in Mali, where Papillon last month commenced pre-construction site works.

It will also pursue an "aggressive exploration agenda" at new prospects in Nicaragua, the Philippines, Columbia and Burkina Faso.

Papillon chief executive Mark Connelly said the deal would allow the company to fast-track development of the Fekola project.

“The combination of Papillon and B2Gold provides Papillon shareholders with the opportunity to gain immediate exposure to a significant, growth orientated and profitable producer with diversified operations whilst still retaining material exposure to the upside potential of Fekola," he said.

"B2Gold’s track record of successful mine development and operation, coupled with its balance sheet, cash flows and funding capacity will de-risk the development of Fekola and should maximise the value of the project for both Papillon and B2Gold shareholders."

Papillon has appointed Macquarie Capital as its financial adviser, with Hardy Bowen and Stikeman Elliott acting as legal counsel.

Should the deal be approved, the companies expect the new B2Gold shares to be tradeable on the TSX and NYSE in late September.

Papillon shares gained almost 10 per cent to reach $1.567 at 10:50am WST.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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