Gold miner Troy Resources has made an all-scrip off-market takeover bid for Azimuth Resources, valuing the target at $188 million.
Troy’s offer of one of its shares for every 5.695 Azimuth shares held has been unanimously recommended for acceptance by Azimuth chef executive Russell Clarke and the company’s board of directors.
The offer values Azimuth at 43.7 cents per share, or $188 million.
Azimuth will also receive $10 million through a convertible note facility provided by Troy, with the notes holding a face value of $1 each and a maturity date of 12 months, convertible at 30 cents per Azimuth share.
Interest on the notes will be fixed at 8 per cent.
Once the transaction is completed, the merged gold miner will have combined measured and indicated gold equivalent resources of 0.76 million ounces, gold equivalent inferred resources of 1.92Moz and gold equivalent reserves of 0.64Moz.
Macquarie Capital is acting as financial adviser to Troy, while Gilbert + Tobin is its legal adviser in Australia.
Azimuth is being advised by Standard Chartered Bank and Steinepreis Paganin in Australia.
Troy chairman David Dix said the takeover would generate material value for both sets of shareholders.
“We have the technical team, the balance sheet and the South American project development expertise to quickly and cost effectively bring West Omai into production,” Mr Dix said in a statement.
“In addition to the upside at our flagship project Casposo, we can see substantial upside in Azimuth’s ground position.”
Azimuth chairman Micheal Hunt said by accepting the offer, Azimuth shareholders would gain all the benefits of being part of a profitable multi-mine gold producer.
“The board strongly believes that Troy is the ideal party to continue development of West Omai as the project moves into an exciting stage of its development,” Mr Hunt said.
“For these reasons, we are unanimously of the view that the deal makes sense for all of our shareholders and we are excited by the potential of the combined business.”
At 10:30AM, WST, Troy shares were down 3.7 cents, trading at $2.12, while Azimuth's stock was up 1 cent, trading at 34.5 cents.
