🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

UPDATE 1-Perseus Mining bids for Amara in West Africa gold push

Published 29/02/2016, 02:36 pm
© Reuters. UPDATE 1-Perseus Mining bids for Amara in West Africa gold push
PRU
-
AMARA
-

* Perseus looks to snare promising mine in Cote d'Ivoire

* Amara seeks capital, expertise to build Yaoure mine

* Amara board backs takeover (Adds Perseus CEO, Amara chairman, analyst comments, share price)

By Sonali Paul

MELBOURNE, Feb 29 (Reuters) - Australia's Perseus Mining PRU.AX has made an all-scrip bid worth $85 million to take over London-listed Amara Mining AMARA.L , looking to pool their West African gold resources as bullion prices defy the commodities gloom.

The gold sector has been seen as ripe for consolidation as smaller companies that have been sapped of capital look to team up with those that have cashflow from producing mines and ride a pick-up in gold prices. bid has the unanimous support of Amara's board, with both companies viewing a merger as the best way to boost their value after lagging a surge in gold stocks over the past year.

Both are eager to develop Amara's promising Yaoure project in Cote d'Ivoire, which could produce 203,000 ounces of gold a year over 15 years and be profitable even if gold fell back to $1,000 an ounce.

"Strategically, it's a good move," said Reg Spencer, an analyst at Canaccord Genuity.

Amara executive chairman John McGloin said teaming up with Perseus, which has cash flow from its Edikan mine in Ghana and no debt, made sense in a market where it is impossible for explorers to line up funds to build a mine.

Amara also wanted to tap Perseus' experience in overcoming problems at its low-grade Edikan mine.

"They've got the scars of an operation that has been difficult," McGloin told analysts on a conference call.

Perseus is offering 0.68 of a new Perseus share and 0.34 of a Perseus warrant for every Amara share, which it said valued Amara at 14.6 pence a share, or 61 million pounds ($85 million), a 42 percent premium to its close last Friday.

Subject to Amara shareholders' approval, the deal is expected to be completed by mid-April.

Perseus Chief Executive Jeff Quartermaine said he was eager to expand beyond Ghana and wanted Yaoure as it would have higher annual output and a longer life than Perseus' proposed Sissingue project in Cote d'Ivoire.

"Given that opportunity to buy an asset that we believe is very valuable for a good price is something clearly we want to do," he told Reuters in a phone interview.

Perseus shares fell as much as 10 percent, which Canaccord's Spencer said reflected a drop in gold prices on Monday, the potenial dilution of Perseus' share base and uncertainty over funding for Yaoure.

Amara has estimated building the mine would cost $334 million. Perseus aims to start producing there in 2019.

($1 = 0.7217 pounds)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.