Ramelius Resources (ASX:RMS) has swooped in and snatched Musgrave Minerals (ASX:MGV) after the latter rejected an all-paper offer from Westgold.
Ramelius and Musgrave moved quickly to finalise their deal (and prevent Westgold from considering a new offer) by entering into a bid implementation agreement (BIA).
Westgold ruled out a new bid with a statement on Tuesday, stating that it does not intend to improve its all-scrip offer or alter its terms and conditions.
The offer closes on 24 July, and any acceptances will be considered "null and void," according to Westgold.
Under the terms of Ramelius' offer, Musgrave shareholders will receive one Ramelius share for every 4.21 Musgrave shares held and $0.04 in cash for every Musgrave share held.
The inclusion of a small cash component in the offer seems to have made Ramelius' offer more attractive than Westgold's all-paper offer.
Ramelius' offer values each Musgrave share at $0.34, based on the one-day volume weighted average price of Ramelius shares on 30 June ($1.263), implying a total undiluted equity value for Musgrave of approximately $201 million.
Westgold offered Musgrave shareholders one Westgold ordinary share for every 5.37 Musgrave shares. Westgold holds a 2.4% shareholding in Musgrave. Its valuation of Musgrave at $177 million clearly indicates an inferior offer compared to Ramelius.
The Musgrave board of directors has unanimously recommended that its shareholders accept the offer in the absence of a superior proposal.
Westminex, Musgrave's largest shareholder, has supported the new offer by signing pre-bid agreements covering approximately 9.70% of Musgrave shares on issue, on the same terms as the Musgrave directors. The total level of pre-bid commitments is approximately 12.13%.
In its statement, Ramelius said it has the financial capacity, operational experience, and exploration expertise to continue the work done by Musgrave, with the aim of expanding the existing mineral resource and developing the Cue gold project to maximise value for both sets of shareholders.
The Cue Project hosts an estimated mineral resource of 12.3 million tonnes at 2.3 grams per tonne (g/t) Au for 927,000 ounces of gold. It is located approximately 35 kilometres from the Mount Magnet gold mine.
Ramelius CEO Mark Zeptner said the company looks forward to welcoming Musgrave shareholders as Ramelius shareholders and encourages Musgrave shareholders to accept the offer as soon as possible.
"Subject to the offer being successful, Ramelius is looking forward to continuing drilling across the tenement package to expand the existing resource and ultimately developing the Cue Project into a high-grade satellite mine for the Mt Magnet production centre, to maximise value for all shareholders," Zeptner said.
Musgrave Minerals CEO Robert Waugh said the company's board is pleased to endorse Ramelius' cash and scrip offer in the absence of a superior proposal.
"Ramelius is a reputable and well-respected Western Australian gold miner with a track record of operational excellence and delivering strong capital returns for shareholders. We are confident that the Cue Project will be in good hands, should the offer be successful, and in the event that does occur, we would look forward to seeing the project contribute to the ongoing success of Ramelius' Mt Magnet operations," Waugh said.
Earlier, Ramelius released a brief update on its performance for the June quarter and financial year.
Ramelius reported that it had its best quarter for the 2022-23 year, producing 68,752 ounces of gold in the three months to March. This brought its total production for the year to 240,996 ounces, which was at the lower end of the original guidance of 240,000 – 280,000 ounces (revised to 240,000 – 250,000 ounces on 27 April this year).
"In addition, the full-year AISC (All-In Sustaining Cost) is expected to remain within the upper end of the original guidance of $1,750 – $1,950 an ounce."
The company also stated that its cash and gold holdings increased significantly during the quarter.
"After allowing for the $75.1 million acquired from the Breaker acquisition, the business delivered a positive cash flow of $42.6 million due in part to the forecasted increased production from the high-grade, high-margin Penny mine," Ramelius informed the ASX.
This increase in cash on hand saw Ramelius' total rise to $272.1 million from $154.5 million at the end of March.
