Shares in Perseverance Corporation (PSV) rose by as much as 35% today after it announced that Northgate Minerals is making a bid to acquire the Australian goldminer, valuing it at $282 million.
The Transaction will be implemented via schemes of arrangement between Perseverance and its shareholders by which a wholly owned subsidiary of Northgate will acquire all of the shares in Perseverance.
Under Northgate's offer, Perseverance security holders would receive 20 cents cash per ordinary share; 8 cents cash for each of the Perseverance options issued as part of the recent $26.5 million placement as well as $100,000 plus any accrued interest per convertible subordinated note.
The directors of Perseverance have unanimously agreed that the transaction is in the best interests of security holders and recommend that all Perseverance shareholders vote in its favour, in the absence of a superior proposal.
Perseverance Corporation Limited is an Australian based gold producer and explorer, operating gold mines at Fosterville and Stawell in Victoria, and with exploration tenements covering over 7,700km along major trends within the Victorian goldfields.
Northgate Minerals Corporation is a Canadian gold and copper mining company with assets in north-central British Columbia and northern Ontario.
"We believe Northgate's offer takes into account the current status and value of the existing operations and exploration potential," said Chairman of Perseverance, John Quinn.
"In addition to providing our shareholders with a significant premium, I expect that the operational expertise and financial resources of Northgate should allow the assets to prosper going forward."
The Perseverance Directors have stated their intention to vote all their securities in favour of the Schemes.
Perseverance said successful completion of the transaction will create a leading mid-tier gold producer with three producing gold mines in politically favourable mining jurisdictions.
"Northgate has the management expertise and financial capability to efficiently fund current development projects, accelerate mine improvements at Perseverance and capitalise on other growth opportunities," the company said.
Mr Quinn said Northgate has a plan to contribute the capital to fund the required development of Fosterville's underground infrastructure and to reinvigorate exploration on the Company's extensive tenements.
Northgate also has agreed to acquire all of Perseverance's existing bank debt of $33.5 million and to provide a new bridging facility of up to $25.0 million.
Northgate has agreed to acquire the bank's exposure of approximately $48.0 million to Perseverance's gold hedges and, after the close of the transaction, Northgate will close out this hedge position, the company said.
CEO of Northgate Ken Stowe said the company's development goal has been the acquisition of a 200,000 ounce producer in a politically stable jurisdiction with exploration potential and the opportunity for Northgate management to secure additional value through its track record as a strong operator.
"With this acquisition of Perseverance, we will add two attractive assets in Australia, which allow us to meet that goal.
"This acquisition will add over 200,000 ounces of production in 2008, in the prolific Victorian gold belt in Australia with over 7,700km2 of exploration area."
Mr Stowe said Northcoat also intends to expand the existing Perseverance exploration program to identify additional reserves and extend the life of the camp.
Meetings of Perseverance shareholders and optionholders to approve the Schemes are expected to be held in mid January 2008 with the transaction planned to be completed in early February 2008.
Perseverance changed hands in heavy volumes today, with almost 37 million shares changing hands, more than 6 times its daily average.
The stock closed the day at 19 cents, a 4.5 cent gain on Friday's close.
