THE BOURSE WHISPERER: Evolution Mining (ASX: EVN) has made its position clear in regards to the proposed take-over of Phoenix Gold (ASX: PXG) by Zijin Mining Group Co., Ltd.
The Jake Klein-led gold producer has shown its hand by announcing it intends to pick up all of the ordinary shares of Phoenix Gold it doesn’t already own.
Evolution currently holds approximately 19.8 per cent of the shares in Phoenix.
Should they opt for the Evolution deal Phoenix shareholders will receive 0.06 Evolution shares and six cents cash for each Phoenix Share, placing a value of 12 cents on each Phoenix share and valuing the equity in Phoenix at approximately $56.4 million.
This ups the ante by a 20 per cent premium to the current Zijin offer of 10 cents per Phoenix share.
That Evolution has an eye on Phoenix is no surprise, especially since the company’s announcement in April this year that it has entered into a binding agreement with La Mancha Group International to acquire 100 per cent of the latter’s Australian operations.
These include the Mungari processing plant, the adjacent high-grade Frog’s Leg underground gold mine and the White Foil open-pit gold mine.
Evolution shareholders appeared to be on board with that transaction with 99.6 per cent of shareholders who voted at an Extraordinary General Meeting held on 30 July 2015 voting in favour of the transaction. The La Mancha transaction remains subject to FIRB approval.
The Phoenix tenement package is a good fit for Evolution in that it adjoins La Mancha’s Australian operations while covering a substantial strike length of the prospective Zuleika Shear and the Kunanalling Shear.
Evolution considers a number of the exploration targets Pheonix has already developed to be geologically similar to the Frog’s Leg mine and the White Foil mine.
The company believes the proximity of the Phoenix tenements to the newly built 1.5 million tonnes per annum Mungari processing plant creates the opportunity for numerous synergies.
There is a bit of history here as well with an approach by Evolution in May 2015 to Phoenix, which resulted in an agreement regarding a strategic investment and partnership.
Under the agreement Evolution subscribed for 44 million fully paid ordinary shares in Phoenix at an issue price 7.5 cents per share, which it stumped up later on with the purchase of an additional 49 million Phoenix shares at 12 cents per share taking its shareholding in Phoenix to its current level of 19.8 per cent.
“There is clear commercial logic in combining the Phoenix assets with the Mungari project which we are acquiring from La Mancha,” Evolution Mining executive chairman Jake Klein said.
“Evolution is committed to building a long-term presence in this exciting region of Western Australia and our intention to make this compelling bid for Phoenix is the next step in our strategy.”