THE BOURSE WHISPERER: Cauldron Energy (ASX: CXU) is making an off-market takeover bid to acquire all of the ordinary shares of Energia Minerals (ASX: EMX).
Under the terms of the cauldron bid, Energia shareholders will be offered one Cauldron share for every eight Energia shares they hold.
This values each Energia share at an implied valuation of 34 cents, which represents a premium of 30 per cent to the closing price of Energia shares on 14 March 2013 of 26 cents and a 29 per cent premium to the company’s five day Value Weighted Average Price.
Cauldron indicated its perceived synergies between the two companies as the impetus for the takeover bid.
The company highlighted the merged entity would control over 190 kilometres of contiguous mineralisation in the Carnarvon Basin region of Western Australia.
Energia responded to the news of Cauldron’s offer by announcing it would advise its shareholders advice on the matter as soon as possible.
“Your Directors will provide further advice in due course,” Energia Minerals said in its ASX announcement responding to the Cauldron offer.
“Meanwhile, shareholders are advised to TAKE NO ACTION in relation to Cauldron’s offer.
“There have not been any prior discussions between Cauldron and Energia.
“Your Directors will keep shareholders fully informed of further developments as they occur and will provide a formal recommendation on the bid in ample time for shareholders to make an informed decision.”
Recent exploration by Cauldron, Paladin Energy (ASX: PDN) and Energia has identified the region to possess a considerable metal endowment
Yanrey project and prospect location plan. Source: Company announcement
“Our bid for Energia rests on our confidence that we are on the verge of defining a major new uranium province in the Carnarvon Basin, and that both Cauldron and Energia have huge exploration and corporate synergies,” Cauldron Energy executive chairman Tony Sage said in the company’s announcement to the Australian Securities Exchange.
“We feel this region has the potential to host a globally significant in-situ leach uranium operation.”
Cauldron announced an increase to the Exploration Target at the company’s wholly-owned Yanrey project in February from 25 to 30 million pounds to 30 to 115 million pounds uranium at a grade of 250 to 900 parts per million uranium.
That upgrade followed a 300 per cent increase in the inferred uranium resource at Bennet Well from 4.8Mlbs to 15.7Mlbs.
The Yanrey project, is adjacent to Paladin Energy’s 24 Mlbs uranium Manyingee deposit and Energia’s 16.7Mlbs Nyang deposit.
“Nyang is situated along strike from our Yanrey uranium project and appears to reinforce Cauldron’s model of uranium mineralisation as they share very similar geological settings,” Sage said.
“We believe both projects could be amendable to an in-situ leaching process, which is a very efficient and low-cost method of uranium production.
“By combining these companies we can create a uranium-focused entity that holds a dominant land position in an emerging and potentially significant uranium province.
“The new company will have the financial, material and human resources to advance multiple uranium deposits towards development, in an environment suitable for low-cost and environmentally friendly in-situ leach mining methods.”