Ramelius Spectrum takeover goes unconditional

Ramelius Resources’ takeover bid for ASX-listed Spectrum Metals has gone unconditional after Ramelius’ relevant interest in Spectrum surpassed 50 per cent. The cash and scrip offer by Ramelius, announced on February 10th and quickly endorsed by the Spectrum board, implied a 50 odd per cent premium to Spectrum’s closing share price at the time.

The offer of one Ramelius share for every ten Spectrum shares held plus cash consideration of A$0.017 per Spectrum share held has been extended to 30 April as a result of the offer going unconditional.  The offer continues to be endorsed by the board of Spectrum in the absence of a more superior offer.

Spectrum has been busy over the summer drilling up its Penny West gold project with strong gold intersections being reported around the Penny West deposit and the Penny North prospect.  Whilst a maiden JORC resource for Penny West of 799Mt grading 13.8g/t gold for 355,500 ounces was announced back in October, the latest drilling program is likely to lead to an upgrade to the Penny West resource. 

Penny West produced some 85,000 ounces of gold from 121,000 tonnes grading a very significant 21.8g/t gold during 1991 and 1992. Previous miners left some good ounces at Penny West but what they failed to realise was that another very significant lode was lurking nearby that Spectrum discovered and named Penny North.  One drill result at Penny North returned 4m at a stellar 105g/t gold from 151m and another returned 6m at 47.4g/t gold from 150m, with 2m at a huge 140g/t gold.

No doubt Ramelius was watching this activity and looking to time its run at Spectrum before any upgrade occurred. Spectrum had an implied value of around A$231 million based on Ramelius offer – 28 times its share price at the start of the previous year.

When the initial takeover offer was made back in February, Ramelius’ Managing Director, Mark Zeptner said his company had an enterprise value of A$870 million and a forecast gold production for FY 2020 of over 200,000 ounces, providing an opportunity for Spectrum shareholders to swap their non-dividend paying shares for a dividend paying stock.

The takeover of Spectrum by Ramelius looks to be a done deal now that the 50 per cent relevant interest hurdle has been navigated and Spectrum shareholders can look forward to the cash windfall plus some upside in Ramelius’ share price as it gets its teeth into Spectrum’s uber-high-grade gold project. 


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