Cardinal Resources Board has endorsed an all cash takeover play from the subsidiary of a Chinese state-owned gold mining company, with Cardinal chief executive officer and managing director Archie Koimtsidis claiming the offer is “strong” and “delivers a significant premium”.
China’s largest gold producer Shandong Gold Mining Co Ltd’s subsidiary Shandong Gold Mining (Hong Kong) made the offer which values Cardinal at $0.60 per share – representing a 75.5% premium to Cardinal’s 20-day volume weighted average price prior to Nord Gold SE’s takeover proposal in mid-March.
Today’s bid from Shandong Gold is also a 31.1% premium to Nord’s takeover proposal that valued Cardinal at $0.45775 per share.
As part of the deal, Shandong Gold has also agreed to an interim funding package and will subscribe for $11.96 million Cardinal shares at $0.46 each.
“This is an opportunity for shareholders to crystallise their investment in Cardinal at an attractive price, and I am pleased that Shandong Gold is committed to getting on with development of Namdini to establish the first long-life gold mine in the upper east region of Ghana – brining many significant and long-lasting benefits to the local community and Ghana,” Mr Koimtsidis said.
“The Cardinal team is looking forward to working with Shandong Gold and its advisors to implement the transaction, delivering a seamless transition as Shandong Gold embarks on the next steps towards this world class development,” he added.
Namdini gold project
Cardinal’s appeal to Shandong Gold is its Namdini gold project in Ghana.
The project has a reserve of 138.6 million tonnes at 1.13 grams per tonne gold for 5.1 million ounces.
A feasibility study was published late last year that estimates capital costs of US$390 million to get the project up and running.
The study anticipates average production of 287,000oz a year and an average gold price of US$1,350/oz.
Initial mine life is projected at 15 years.
At the average US$1,350/oz gold price, the feasibility study indicated post-tax undiscounted cash flow of US$1.005 billion over the mine’s life.