Focus has told shareholders to take no action in response to an unsolicited takeover from Theta Gold, which is looking to win over investors mulling funding options for the long-dormant Coolgardie mine.
Focus has told shareholders to take no action in response to an unsolicited takeover from Theta Gold, which is looking to win over investors mulling funding options for the long-dormant Coolgardie mine.
Theta Gold Mines propositioned shareholders, which includes China-based mining giant Shandong Gold, with an offer to acquire all Focus shares via a two TGM for every one Focus share held exchange this morning.
The deal values Focus shares at roughly 36 cents each and represents what Theta says is a 41.2 per cent on Focus’ December 8 closing price of 25.5 cents.
In all, it values Focus at around $65 million.
It comes a week after Focus announced a $45.69 million one-for-one entitlement offer to garner funds to resume gold mining operations at its Coolgardie gold project, with plans to recommence operations confirmed that same day.
The project has been on care and maintenance since August 2013, but efforts to get the operation up and running have accelerated in recent months.
It’s also not the first time an offer has been made for the project, with Horizon Minerals and Hanking Gold Mining both making submissions in 2019.
Focus is understood to be the largest landholder in the Coolgardie gold belt, with over 450 square kilometres of tenements.
Focus’ largest shareholder Shandong Gold pitched in an extra $US10 million ($A13.9 million) via an unsecured loan facility as part of the proposed Coolgardie fundraiser, adding to its existing $US20 million ($A27 million) Shandong borrowings.
But Theta is seeking to counter the entitlement offer, claiming it will likely “entrench control for Shandong Gold at a significant discount and requires Focus shareholders to subscribe for further shares or risk being substantially diluted.”
Shandong had a 49 per cent stake in Focus as at March 2021.
Theta owns a several gold assets in South Africa but its core project is its operation in Pilgrim’s Rest, situated 370 kilometres northeast of Johannesburg.
Part of Theta's proposition is the combination of these assets in South Africa and Focus’ assets in Western Australia to form what it claims would be a group with more than 12 million ounces in gold resources
Theta Gold chair Bill Guy said the offer presented a compelling opportunity to Focus shareholders.
“In essence, Theta Gold considers that its offer is a more attractive proposition to Focus shareholders (including Shandong Gold) than the uncertain and highly dilutive development proposal put forward by Focus,” he said in a statement.
“A combination of Theta Gold and Focus would create a group with a significant presence on the ASX, operating bases in South Africa and WA, and over 12 million ounces of gold resources under management.”
The offer is conditional on Focus’ entitlement offer not proceeding and will not be subject to a minimum acceptance condition, according to Theta.
Focus told shareholders to take no action in relation to the intended offer but noted that it is considering the offer with external advisers.
“The company will provide a further announcement in due course when it has evaluated and assessed the terms of the TGM intended offer,” Focus’ statement said.
Whether the offer sparks another Cardinal-style bidding war remains to be seen.
Focus Minerals shares last traded at 26 cents, while Theta shares last traded at 18 cents.