Red 5 in $4m takeover bid

Gold junior Red 5 has announced a hostile $4 million takeover bid for unlisted public company Bullseye Mining, which owns tenements near Red 5’s Darlot gold mine.

Under the proposed deal, Bullseye shareholders will be offered one share in Red 5 for every five Bullseye shares.

Bullseye's gold portfolio includes the Laverton Project, located 30km to the north of the Darlot gold mine.

It also has its Southern Cross and Aurora gold projects.

The O'Connor-based company was formed in 2006 and is led by non-executive chairman Peter J Burns and executive directors Dariena Mullan and Peter G Burns.

In a statement to the ASX, Red 5 said it had written to the directors of Bullseye seeking to begin discussions, but had been unable to come to an agreement.

The offer is subject to a number of conditions, including a minimum acceptance offer of 90 per cent and Australian Foreign Investment Review Board approval.

The company explained the rationale for the proposal.

“The transaction is consistent with Red 5’s stated Eastern Goldfields consolidation strategy. Bullseye’s Laverton gold project is in close proximity to the Darlot processing plant and supports the company’s mill expansion objectives, as well as adding to its long-term exploration portfolio,” Red 5 said.

“For Bullseye shareholders, it provides a clear pathway for Bullseye’s projects to be commercialized, while reducing their project development risk by gaining exposure to Red 5’s existing asset portfolio and technical skills.”

Red 5's legal adviser is HopgoodGanim Lawyers.

Shares in Red 5 were down 1.4 per cent at 7.1 cents each at 245pm AEDT.