The Cardinal Resources Ltd (ASX: CDV) share price is flying higher today following news that a subsidiary of China’s largest gold producer is making a play for the ASX miner.
Cardinal Resources is a gold-focused exploration and development company that holds interests in tenements within Ghana, West Africa.
What’s the deal?
This morning, Cardinal announced a takeover bid from Shandong Gold at an offer price of 60 cents per share, valuing the company at around $300 million. This represents a 29% premium to Cardinal’s last closing price of 46.5 cents, and a 31.1% premium to a takeover proposal from Nord Gold SE announced in March.
The offer from Shandong Gold is subject to certain conditions, including 50.1% minimum acceptance by Cardinal shareholders and regulatory approval. On the regulatory front, Shandong Gold will need to obtain approval from the Foreign Investment Review Board, along with various regulatory bodies from the People’s Republic of China.
Cardinal’s board are in favour of Shandong Gold’s offer, recommending that all Cardinal shareholders accept the offer in the absence of a superior proposal.
“The Board of Directors of Cardinal has negotiated what we consider a strong offer for our shareholders and one which delivers a significant premium to Cardinal’s market price, at a time of considerable volatility and uncertainty in global markets,” said chief executive Archie Koimtsidis.
Interim financing
In conjunction with the transaction, Shandong Gold has also agreed to provide Cardinal with interim funding of $11.96 million by way of a placement. In the absence of a competing proposal, the placement will be completed at an issue price of 46 cents per share and is not subject to shareholder approval.
The funds will be used to ensure Cardinal continues advancing the Namdini Project towards development. Namdini is a gold project located in Ghana which has a published ore reserve of 5.1 million ounces.
At the time of writing, the Cardinal Resources share price has soared 27.31% to 59.2 cents after rallying as much as 31% in early trade.
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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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