Gold miner, Lihir Gold has said today it has agreed to an all-share takeover of Equigold NL (EQI) in a deal valued at over $1.1 billion.
The combined group will have market capitalisation of $9 billion creating a ‘global pure gold company’ with a diversified portfolio of high quality operations, a strong financial base and an exceptional growth profile.
Under the deal, Equigold shareholders will receive 33 LGL shares for every 25 Equigold shares they own, representing a premium of 24% on EQI share price to its closing price on 19 March 2008.
The offer values the Equigold shares at about $5.33 each.
In a joint statement to the market, LGL and Equigold said the merger will bring significant benefits to each of the companies and their shareholders.
“The new entity will be well placed to take advantage of on-going strength in the gold price to deliver increased returns to shareholders,” LGL chairman Ross Garnaut said.
“We will have a robust balance sheet, virtually no hedging and an excellent growth profile.”
The combined group will have world class assets in Australia, West Africa and Papua New Guinea, producing in excess of 1.2 million ounces of gold a year from 2009 at a cash cost in the lowest quartile of global producers.
Lihir Gold is a Papua New Guinea-based gold miner and is listed on the Australian Securities Exchange.
Lihir’s flagship operation is on Lihir Island, off the north coast of the PNG mainland.
In its annual results, the company has forecast production of 740,000 to 820,000 ounces of gold for 2008, including first production from its Ballarat operation in Victoria of 40,000 – 50,000 ounces.
But following the merger, LGL said it will have about 25 million ounces in reserves at operations at Lihir Island in PNG, Ballarat in Victoria, Mt Rawdon in Queensland and at Bonikro in Ivory Coast, Africa.
Equigold is an Australian gold miner with production at the Mount Rawdon and Kirkalocka projects in Australia. It is developing the 85% owned Bonikro deposit located in Ivory Coast in West Africa.
Equigold said it intends to vote in favour of the takeover in the absence of a better offer.
Shares in EQI added 7.6% to $4.63 while Lihir Gold lost 44 cents to $3.60.
