Gold rush: bidding war erupts for OreCorp
Takeover suitors circle gold miner OreCorp, with all eyes on its key project in Tanzania, one of the biggest producers of the precious metal in Africa.
QLD Business
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A bidding war has emerged for African gold miner OreCorp with its major shareholders saying they will back a sweetened offer from previously rejected suitor Perseus Mining.
The move to accept the higher offer means preferred buyer Silvercorp will have five days to match or beat the new bid for the ASX-listed OreCorp.
OreCorp on Wednesday said a new conditional bid from Perseus Mining of 57.5c a OreCorp share, up from 55c per share – and conditional on the board recommending shareholders accept the deal – is a ‘superior’ offer to Silvercorp’s scrip deal that values OreCorp at 53.4c per share. Both Silvercorp and Perseus each have about 20 per cent of OreCorp.
Vancouver-based Silvercorp has five days to increase its offer or alter its bid and if it fails to pick up its matching rights, the OreCorp board intends to recommend shareholders accept Perseus’ offer. Major OreCorp shareholders Tim Goyder and Nick Giorgetta have agreed to accept the amended Perseus deal if the board recommendation is provided. Orecorp shares rose almost 4.5 per cent to 58c Wednesday.
The $2.8bn Australian-listed Perseus is in acquisition mode as it also lines up to compete for Newmont’s Akyem gold mine in Ghana, which is up for sale through investment bank Citi and could be worth close to $1bn. Both suitors are eyeing the potential of OreCorp’s key Nyanzaga Gold Project in northwest Tanzania.
The project is at an advanced development stage in the Lake Victoria Goldfields, approximately 30km northeast of the Bulyanhulu Gold Mine run by Barrick Gold.
The project comprises a special mining licence, which covers 23.4 square kilometres, and encompasses the Nyanzaga and Kilimani deposits and other exploration prospects.
The Tanzania government holds a 16 per cent interest in Sotta Mining, a subsidiary of OreCorp and the holder of the mining licence.
Tanzania is one of Africa’s largest gold producers, with gold accounting for approximately 90 per cent of the country’s total mineral exports. The country’s gold mining industry is primarily concentrated in three regions: the Lake Victoria Goldfields, the Handeni Goldfields, and the Mpanda Mineral Field. The Tanzanian Fair Competition Commission last month gave the green light to Silvercorp’s acquisition.
Perseus currently operates three gold mines in Africa: Edikan in Ghana, and Sissingue and Yaoure in Cote d’Ivoire. Last year, Perseus Mining managing director Jeff Quartermaine said the company had focused on expanding its mines in Africa to reduce risk.
“Being a single mine operator in Africa is a fairly risky position to adopt because not only do you have commodity cycles, but you also have political cycles, and we will be in a far better position if we could spread our risk over multiple operations in multiple jurisdictions,” said Mr Quartermaine.
“It did take us a bit of time to get the first operation operating satisfactorily, but then once that happened, we were able to move on to develop our second one, which was Sissingue, and then ultimately the third one, which was Yaoure. And of course, we were well on the path to an investment decision on our fourth property, which would be would have been in Sudan, until earlier this year when a war unfortunately broke out in Sudan, which has put those development plans on hold.”
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