Privately-held gold miner Nordgold has made a non-binding indicative and conditional proposal to acquire all the issued share capital of ASX-listed gold junior Cardinal Resources not already owned by Nordgold.
Nordgold currently owns approximately 98.4 million shares in Cardinal Resources, which includes the 16.5%, which it is in the process of acquired from Gold Fields at a price of 45c, giving it voting power of approximately 19.9% of the total share capital outstanding.
The preliminary proposal by Nordgold, which will be financed through Nordgold’s existing cash reserves and facilities, values the equity of Cardinal Resources at approximately A$227 million (or US$143 million) and represents a cash premium of 83% to Cardinal’s closing price on 13 March.
Nordgold is seeking confirmatory due diligence from Cardinal Resources to access on certain key aspects of Cardinal’s Namdini gold project, in Ghana, on which a feasibility study was completed in October 2019.
Cardinal has been looking since approximately H1 2019 to source project financing, and is concurrently evaluating strategic alternatives to bring the Namdini Project into production.
Nordgold has indicated it will work constructively with Cardinal to expedite its confirmatory due diligence with the aim of completing it within a four week period.
Following the successful completion of confirmatory due diligence to Nordgold’s satisfaction, Nordgold would seek to formulate a binding preliminary proposal.
Nordgold, which currently operates ten mines, with four of these in West Africa (three in Burkina Faso and one in Guinea, is strategically committed to West Africa and believes that it is strongly positioned to bring the Namdini Project into production based on its development and operational expertise in the region and robust balance sheet.
According to Nordgold CEO Nikolai Zelenski, Chief Executive Officer, the company’s preliminary proposal to acquire Cardinal Resources would represent a substantial cash premium for Cardinal shareholders and provides an immediate opportunity to realise value without the associated risks of project development.
“Nordgold is committed to operating in West Africa, and has the proven development experience and balance sheet to bring Namdini into production to the benefit of the local community and all stakeholders,” concludes Zelenski.