Ramelius Resources’ acquisition drive to feed its Edna May gold plant has hit a speed bump, with gold explorer Explaurum telling shareholders its takeover bid is undervalued and ill-timed.
The miner launched an all-scrip $59 million bid on Monday to gain control of Explaurum’s Tampia prospect 140km south of its Edna May gold mine near Westonia.
Ramelius yesterday announced the $13 million purchase of the Marda gold project 190km north of Edna May.
Explaurum today told the market its view that the Ramelius offer grossly undervalued Tampia was supported by its “opportunistic timing”.
A resource estimate and development study for the Mace gold mineralisation near Tampia is due to be released shortly followed by a bankable feasibility study for the project in November.
The two companies last week started talks on a potential merger and this week’s takeover bid took Explaurum by surprise.
Explaurum shareholders would dilute their exposure to the potential Tampia open-pit development for a stake in two high-cost Ramelius assets with short lives, according to the statement.
Evolution Mining sold Edna May to Ramelius in November for $40 million cash and up to $50 million in further production-related payments.
Ramelius is currently considering whether to commit to further developing Edna May using open-pit or underground mining, with the underground option understood to result in significant surplus capacity in the processing plant.
Explaurum expects to issue a target statement in mid-October with the directors’ recommendation to shareholders.