Phoenix Gold has reiterated shareholders should reject a cash and scrip takeover offer from Evolution Mining, even though a rise in Evolution’s share price has boosted the value of the deal.
Evolution is offering Phoenix 6 cents in cash and 0.06 Evolution shares for every Phoenix share to wholly acquire the business, with the original deal valuing Phoenix at 12 cents per share.
However, since the deal was first made in mid-September, Evolution’s share price has risen from $1.13 to $1.60 as of the close of trade today, effectively increasing the value of the deal to 15.3 cents per Phoenix share, based on Evolution’s volume-weighted average share price over the last two days.
In a statement, Evolution said the offer, which is now unconditional, was a 52.8 per cent premium to China company Zijin Mining Group’s competing offer of 10 cents cash per Phoenix share.
Zijin made its offer to Phoenix in early September, prior to Evolution’s offer, at which point an independent expert valued Phoenix at 15.6 cents per share.
But the junior explorer continued to unanimously recommend shareholders reject the offer, saying today that it still does not fairly reflect the value of the company’s assets.
“Phoenix notes that the Evolution offer has gained minimal traction since the announcement of the bid, which acceptances to date of only 0.18 per cent of Phoenix’s total shares on issue,” the company said in a statement.
“The company also notes the recent rise in the Australian dollar spot gold price to in excess of $1,600 per ounce since Evolution’s bidder’s statement was first lodged.
“This healthy rise further strengthens the inherent value of Phoenix.”
Evolution is seeking to gain control of Phoenix in order to integrate the explorer’s tenements with its existing operations, including the Castle Hill project, near Kalgoorlie.
Evolution has extended the offer period by a month, and will close on November 26.
Shares in Phoenix were 1.3 per cent higher to 15.2 cents each at the close of trade.