SOUTH African-based AngloGold Ashanti increased its cash offer for the $370 million (R5.25bn) takeover of Canadian firm Corvus Gold and will pay a 26 percent premium for the transaction as gold producers quench their thirst for resources.
JSE-listed AngloGold Ashanti said yesterday that it had entered into a definitive arrangement agreement to acquire the remaining stake in Corvus two months after the group made a non-binding offer for the asset.
AngloGold Ashanti currently holds a 19.5 percent indirect interest in Corvus, which is listed on the Toronto Stock Exchange (TSX) and Nasdaq Capital Markets.
AngloGold said yesterday that the Corvus’ board of directors had agreed to receive C$4.10 (R46) a share in cash, up from the C$4 a share offer made in July.
The group said the offer price represented a premium of about 26 percent to the closing price of Corvus common shares on the TSX on July 12, 2021, the day prior to the announcement that it had submitted a non-binding proposal to Corvus, and a 59 percent premium to the closing price of Corvus common shares on the TSX on May 5, 2021, the day prior to the announcement of the loan agreement and exclusivity.
The group said the takeover would cost an estimated $370m.
It said the transaction implied a total equity value for all Corvus common shares and outstanding options to acquire common shares of about $450m.
Corvus, the gold exploration and development company, owns the North Bullfrog project and the Mother Lode in the gold-rich Nevada, also known as the Beatty district. The assets are also near AngloGold Ashanti’s silicon project.
AngloGold’s chief executive, Alberto Calderon, said this transaction delivered a compelling, district-wide consolidation in Nevada, which allowed for the Beatty District to become a potential Tier 1 asset for the group.
“The inclusion of these assets in our portfolio will enable AngloGold Ashanti to have its first production in North America in the next three to four years, further improving the overall geographic balance of our portfolio,” said Calderon.
Calderon said placing these assets under single ownership would allow for significantly reduced capital intensity to develop the district with a phased and modular approach, providing for a meaningful, low-cost production base in the medium and longer term.
Corvus’ president and chief executive, Jeffrey Pontius, said the proposed all-cash offer provided a compelling opportunity for Corvus shareholders to realise significant value and eliminates exposure to future capital requirements to fund construction of Corvus’ projects.
“AngloGold Ashanti has been a supportive shareholder of Corvus since its inception and has supported us in our capital raising needs along the way. AngloGold Ashanti’s long history of successful and responsible exploration, discovery, mine building and operating expertise will be a significant benefit to the region and all of its stakeholders,” said Pontius.
AngloGold said the consolidation of the Beatty District could potentially deliver significant synergies due to economies of scale and integrated infrastructure, including processing facilities at an attractive capital intensity.
AngloGold’s share price gained 2.31 percent to close at R223 on the JSE yesterday.
dineo.faku@inl.co.za
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