THE BOURSE WHISPERER: Ramelius Resources (ASX: RMS) and Spectrum Metals (ASX: SPX) have struck a Bid Implementation Agreement (BIA) that will result in Ramelius offering to acquire all of the issued and outstanding ordinary shares in Spectrum that it does not already own.
Spectrum Shareholders will receive one Ramelius share for every ten Spectrum shares held and cash consideration of 1.7 cents per Spectrum share held, valuing Spectrum shares at 15 cents each – a 52 per cent premium to Spectrum’s last closing price of 9.9 cents on 7 February 2020.
On Ramelius’ radar is Spectrum’s 100 per cent-owned Penny West gold project, located approximately 150 kilometres south-east of Ramelius’ Mt Magnet mining and processing operations north-east of Perth in Western Australia.
Spectrum recently announced a maiden Mineral Resource estimate for the Penny West gold project of 799,000 tonnes at 13.8 grams per tonne gold for 355,500 ounces, including 569,000 tonnes at 16.8g/t gold for 306,800 ounces at Penny North.
The two companies consider the proximity of Ramelius’ Mt Magnet processing facility to Spectrum’s Penny West gold project provides potential to realise capital cost savings and operational synergies in developing the Penny West while maintaining exposure to ongoing exploration potential.
“There is clear logic in the combination of Spectrum’s assets with Ramelius’ WA operations,” Ramelius Resources managing director Mark Zeptner said in the company’s announcement to the Australian Securities Exchange.
“After the successful acquisition of the Marda and Tampia Hill gold projects in 2019, Ramelius is focussed on building on its growth strategy to extend mine life and maximise the value of existing infrastructure in its portfolio.
“This compelling offer is the next step in that growth strategy and is expected to provide significant benefits to both Spectrum and Ramelius shareholders.”
The deal appears a good one for shareholders of Spectrum, who will not only remain exposed to all of the upside from exploration and development of Penny West but will benefit from having access to cash flow generating assets at Edna May, Mt Magnet and Vivien, while gaining exposure to the Marda and Tampia Hill projects through being a shareholder of the enlarged combined group.
“The last year has been one of exceptional growth for Spectrum which we are particularly proud of,” Spectrum Metals chairman Alex Hewlett said.
“The Penny West gold system is developing into one of significant value, I am firmly of the view that this transaction with Ramelius will unlock the full value of Penny West for the benefit of all of our shareholders.
“The combination of Penny West with the existing assets of Ramelius will build a gold business capable of delivering exceptional future returns for our shareholders.”