Focus and Crescent move in together
THE BOURSE WHISPERER: Western Australian Goldfields neighbours Focus Minerals and Crescent Gold have decided to combine their houses.
The two companies made a joint announcement telling the market they have agreed to merge by way of a conditional off-market takeover bid by Focus for all of the issued shares in Crescent.
Keeping the mood friendly the Crescent board has unanimously recommend the offer, and intend to accept it in respect of their Crescent holdings, in the absence of a superior proposal being presented.
Based on forecast production volume comparing annual production targets in calendar year 2012 of 100,000 ounces for Crescent and 130,000 ounces for Focus, as compared to calendar year 2011 production targets of other ASX primary listed gold producers, the deal will move Focus up into the top five Australian gold producers.
The company will have a targeted annual production of 230,000 ounces, a combined JORC resource base of 4.3 million ounces of gold, and outstanding growth potential across two major Western Australian mining regions.
The consideration being offered to Crescent shareholders is one Focus share for every 1.18 Crescent shares, which represents a premium of 30.5% to Crescent’s closing price on 17 June 2011.
The Offer is subject to customary conditions, including a minimum acceptance of 90%; no Material Adverse Change; and no prescribed occurrences.
The transaction has the support of Crescent’s major shareholder, Deutsche Bank AG who has agreed to accept the offer in respect of a 19.9% stake in Crescent pursuant to a Pre-Bid Agreement with Focus.
Announcing the merger the respective boards of the two companies said the combination of the two will provide significant strategic and financial benefits to both sets of shareholders.
“The merger of Crescent Gold and Focus Minerals provides a unique opportunity for both businesses to fast track their growth aspirations making Focus one of Australia’s Top 5 gold producers,” Focus Minerals chief executive officer Campbell Baird said.
“Once this transaction is complete this creates a strong platform for both companies’ shareholders to benefit from a substantial value uplift from a significant increase in combined production, a doubling of gold resources, and the ability to step up exploration within Crescent’s extensive landholding.”
Crescent Gold managing director Mark Tory was equally effusive in his support of the merger.
“The board of Crescent Gold considers the transaction to be a compelling opportunity for Crescent shareholders to capture a premium for their shareholding and become part of a major new Australian gold producer,” Tory said.
“Post-acquisition, Crescent shareholders will be part of an entity with an exciting production and exploration growth profile, strong balance sheet, diversified asset portfolio, and a strong track record in mine operations.”
The announcement outlined what the two companies consider to be the key compelling benefits for both Focus Minerals and Crescent Gold shareholders.
These include include:
The creation of a new Top 5 Australian Gold Producer – With a targeted annual production of 230,000oz in 2012 and outstanding growth potential across two major Western Australian mining regions, the combined company will become a top 51 Australian gold producer.
A proven Track Record of Mine Operation – Focus has a deep management team with proven development and mine operation capabilities, having recommissioned the Three Mile Hill processing plant 18 months ago and opened two new mining operations in the last three months.
Resource Growth Potential – The combined group will have a significant JORC Resource inventory of 4.3 million ounces. Both the Laverton and Coolgardie regions have demonstrated the opportunity for significant resource growth on targeted exploration program. Focus brings the immediate funds to accelerate exploration at Laverton, with strong group revenues providing a basis to fund further exploration to expand group resources.