Westgold Resources has declared its intentions to make a $177 million scrip bid for gold junior Musgrave Minerals, with both companies occupying land in the busy Murchison gold province.
The Wayne Bramwell-led gold miner plans to offer Musgrave shareholders one Westgold share for every 5.37 held, in a deal that prices the target at about $177 million or 30 cents per share.
“The combination of Westgold and Musgrave is a logical and capital efficient solution that consolidates both groups’ regional assets into a larger scale, more profitable and highly investable Western Australian focused gold miner,” Westgold’s pitch read.
Westgold claims it approached Musgrave - led by Rob Waugh - on Thursday June 1 looking to engage on a potential takeover and presented a non-binding offer letter to the junior’s executive team the day after.
But it has suggested that the proposal's confidentiality had been compromised, pointing to Musgrave's higher trading volumes.
"Unfortunately, Westgold considers that the Proposal’s confidentiality has now been compromised as evidenced by yesterday’s Musgrave share trading volumes which were approximately 6.6 times higher than the average 12-month daily share turnover3 and resulted in a 6.25% share price increase, notwithstanding that Musgrave released no ASX announcement, the gold price was lower and Western Australia had a public holiday," a statement from the company said.
"Westgold looks forward to engaging as soon as practicable with Musgrave and its advisers in respect of this highly attractive Offer."
Musgrave shares gained another 17 per cent today to close at 30 cents, in ine with the takeover offer.
It told shareholders to take no action in relation to the offer, with the board to make a recommendation once it receives a bidder’s statement.
Musgrave has appointed Longreach Capital as its financial adviser and Thomson Geer as legal adviser.
Of interest to Westgold is Musgrave’s flagship Cue project, located in Western Australia’s Murchinson province.
New South Wales-based miner Evolution Mining has a 75 per cent stake in part of the Cue project.
Also residing close by in the region is Ramelius Resources, which operates the Mt Magnet gold mine south of Cue.
To the west of Cue is Gascoyne Resources' Dalgaranga outfit, which was put under care and maintenance in November 2022.
Westgold’s timing comes months after Musgrave tabled a stage one prefeasibility study outlining plans to construct a 500,000 tonne per annum processing plant for about $121 million to service the proposed 345,000 ounce mine.
Part of Westgold’s pitch is to ‘sidestep the the high risk, dilutive and arduous process of approval, finance, construction and start-up of a small, stand-alone processing facility in a region already well serviced with processing infrastructure.’
Westgold is being advised by Argonaut PCF and law firm DLA Piper.
