Ramelius wades back into gold sector M&A with bid for Musgrave
Ramelius Resources, the operator of the Mount Magnet gold mine, is expanding with a buyout offer for Musgrave Minerals, which is developing a project in the same region in Western Australia.
The offer values Musgrave at about $201 million and was unveiled on Monday, a week after Musgrave knocked back Westgold Resources. It comes as Ramelius continues to integrate Breaker Resources and its Lake Roe gold project near Kalgoorlie following a $130.7 million takeover of that company.
Ramelius Resources chief executive Mark Zeptner. Billy-Ray Stokes
The Westgold bid for Musgrave brought forward Ramelius’ move amid significant consolidation in the country’s goldmining sector. Westgold owns and operates two gold processing hubs in Murchison and was keen to add Musgrave’s Cue project in the region to the existing assets.
However, the Cue project is within 40 kilometres of Ramelius’ operations at Mount Magnet. Musgrave has outlined plans to spend $121 million to produce 337,000 ounces of gold over five years under stage one at Cue.
Ramelius said utilising the existing infrastructure at its Mount Magnet operations could slash the capital and development costs for Cue by up to $95 million. Its takeover offer comprises a 1-for-4.21 scrip component and an additional 4¢ in cash for every Musgrave share. It values each Musgrave share at 34¢, a 19 per cent premium on the closing price last Friday.
The offer has the support of the Musgrave board and the company’s major shareholder, Westminex, which has a 9.7 per cent stake.
Musgrave shares jumped almost 16 per cent to 33¢ on Monday while Westgold was up more than 8 per cent to $1.56. Shares in Ramelius fell 2¢ to trade at around $1.24. They are up 31 per cent in the last 12 months.
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