Lending Association

Perseus challenges Silvercorp’s takeover of OreCorp with full cash offer

Cashed-up African gold miner, Perseus (ASX:PRU), has disrupted the already tumultuous takeover bid for OreCorp by Canada’s Silvercorp Metals with a full cash offer of 55 cents per share. While it represents just a 4% premium to Silvercorp’s cash and share bid, Perseus’ transaction appears likely to succeed unless the Canadian company can secure sufficient funds to counter with an all-cash offer.

Perseus’ offer values OreCorp at AUD 258 million, a company with a market capitalization of approximately AUD 2.45 billion. The financing for this offer will come from Perseus’ existing cash and bullion reserves, which stood at USD 594 million as of September 30 last year.

Perseus has acquired a 19.9% stake in OreCorp at a price of 52.5 cents per share. The bid, announced on Monday, will be an off-market offer, avoiding the complications associated with a scheme of arrangement.

The conditions of Perseus’ offer closely mirror those of the Silvercorp bid, including the requirement to acquire 50.1% of OreCorp’s ordinary shares. Silvercorp had transitioned to an off-market offer for OreCorp in late December, offering a slightly higher cash component.

OreCorp’s primary asset is the Nyanzaga Gold Project in northwest Tanzania, while Perseus operates three gold mines in West Africa, including Yaouré and Sissingué in Côte d’Ivoire and Edikan in Ghana. Perseus has also been preparing for the development of a fourth mine, the Meyas Sand Gold Project, in Sudan.

Perseus’ CEO, Jeff Quartermaine, stated on Monday, “Perseus has presented this new offer directly to OreCorp shareholders, as it represents a compelling opportunity for both OreCorp and Perseus shareholders. The acquisition of OreCorp’s shares aligns with Perseus’ growth strategy of building a diversified portfolio of high-quality gold assets across the African continent. This offer is clearly superior to the Silvercorp takeover in terms of price, as indicated by recent Silvercorp trading, and offers certainty of consideration, being an all-cash offer. In other words, it ensures that OreCorp’s shareholders receive full value and certainty for their shares in OreCorp.”