Business people exchanging documents.

Westgold Resources has made an all-scrip off-market takeover offer (the offer) for Musgrave Minerals, in which Westgold will claim all of Musgrave’s issued outstanding shares. 

In return, Musgrave shareholders will receive one fully paid Westgold share for every 5.37 Musgrave shares held (offer consideration). The offer consideration implies an undiluted equity value for Musgrave of $177.3 million or $0.30 per share. 

According to Westgold, the offer gives Musgrave shareholders the opportunity to see their gold assets developed by an experienced gold miner in a timely and capital efficient manner and provides an immediate premium that sidesteps the high risk, dilutive and arduous process of approval, finance, construction and start-up of a small, stand-alone processing facility in a region already well-serviced with processing infrastructure. 

This combined entity would be underpinned by Westgold’s technical capability, team and strong financial position comprising cash and liquid assets of approximately $180 million and nil debt. 

This offer announcement follows Westgold’s initial approach to Musgrave on Thursday 1 June 2023, seeking positive engagement in respect of a potential takeover bid. 

A non-binding offer letter (outlining the same terms in the offer) together with an associated process deed (proposal) was formally presented to Musgrave for consideration on Friday 2 June at a meeting between key respective executives. 

Westgold has been advised that the proposal remains under consideration from the Musgrave board. 

Westgold’s Managing Director, Wayne Bramwell, said the company’s view is that Musgrave’s plan to construct a new, small processing plant within close trucking distance of two established larger processing plants is ambitious. 

“Their proposed development path costing $121 million in startup capital at a PFS level of certainty materially escalates risk to Musgrave shareholders, as it exposes them to all the uncertainties, challenges and dilution associated with project development.” 

Mr Bramwell said it is a high risk and inefficient use of their shareholder’s capital at a time when securing capital for small scale, single asset companies is becoming more difficult and costly. 

“There is a faster and lower risk solution available to Musgrave shareholders to see their Cue gold assets developed in a timely manner. 

“The Westgold offer provides a logical, capital efficient and fast track solution that delivers immediate value to both Musgrave and Westgold shareholders and can rapidly enhance production scale and profitability of the combined Group.”

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