Directors of Primary Gold Limited (ASX: PGO) have recommended shareholders back a $37.5 million offer for the emerging gold miner from its largest shareholder Hanking Australia Investment Pty Ltd.
Hanking Australia – which has an existing 8.4% interest in Primary – has made an all cash takeover offer of A$0.0575 per share, valuing Primary’s share capital, including shares attributable to in the money options, at approximately A$37.5 million.
The offer price provides Primary shareholders a significant premium for their shares, representing a 47.3% premium to Primary’s last traded share price of A$0.039 on 16 February 2018 and 35.4% premium to the 30-trading day VWAP of A$0.042 per share up to 16 February 2018.
Primary Gold’s independent directors have unanimously recommended Primary shareholders accept the offer, in the absence of a superior proposal and subject to the independent expert not concluding that the Offer is not fair and not reasonable.
Hanking Australia is Primary’s biggest shareholder and its Managing Director, Dr Mark Yumin Qiu, has served as a non-executive director of Primary since 2014.
Since Dr Qiu is a director of both Hanking Australia and Primary, an independent board committee comprising Primary Gold directors Garry Mills and
Mr Tony Patrizi has been formed to consider, negotiate and agree the Offer.
“Hanking Australia’s Offer provides Primary shareholders with an attractive opportunity to realise a significant premium and certain cash value for their investment in Primary. Primary’s Executive Chairman and Managing Director, Mr Garry Mills, said:
The Independent Directors of Primary intend to accept the Offer, in the absence of a superior proposal and subject to the independent expert not concluding that the Offer is not fair and not reasonable.”
The offer is subject to minimum acceptances greater than 50%, FIRB approval, market linked and other customary conditions.
The offer is not subject to any Chinese regulatory approval or any financing conditions.
Hanking Australia has also agreed to make available interim funding to Primary for up to A$1.5 million.
BDO Corporate Finance (WA) Pty Ltd (BDO) has been appointed the independent expert to opine on whether the Offer is fair and reasonable. The Independent Expert’s report will be included in the Target’s Statement.
Hanking Australia is a subsidiary of China Hanking Holdings Limited (CHH), a diversified international mining company listed on the Hong Kong Stock Exchange (HKSE:03788) with operations in Australia, China and Indonesia.
For the half year ended 30 June 2017, CHH generated profit of approximately A$165 million.
Primary Gold’s flagship asset is the Mount Bundy Gold Project in the NT, which includes the Rustlers Roost open pit project, Toms Gully high grade underground mine and 250ktpa processing facility, the Quest 29 deposit and a large lease holding of approximately 1,500km2 of underexplored tenure across the Pine Creek region.
Last month, Primary received final statutory approval from the Department of Mines, Industry Regulation and Safety allowing mining to commence at its Coolgardie project.
Primary began trading again this morning and was last up 1c, or 26%, to 4.9c.