PERSEUS Mining said today it had accumulated a 19.9% stake in gold developer OreCorp which is currently under offer from a third party. Listed in Sydney, OreCorp owns the Nyanzaga Gold Project in Tanzania.
OreCorp has been targeted by Silvercorp Metals, a Vancouver-headquartered mining firm with interests in China as well as Tanzania. Perseus said it would use its stake in OreCorp to vote against SilverCorp’s offer which comprises a scheme of arrangement. The vote on the scheme is scheduled to take place on December 8.
Perseus added, however, that it did not intend to launch a competing takeover offer but it would “welcome the opportunity to engage with OreCorp in order to determine an optimal and expedited pathway forward for the development of the Nyanzaga Gold Project”.
At its closing today, a 19.9% stake in OreCorp is valued at A$44.4m.
A 75% majority of eligible shareholders in OreCorp is required to pass Silvercorp’s offer. Sivercorp already has a 15% stake in OreCorp.
Perseus’ manouevre serves notice the company plans to extend its footprint to East Africa having built approximately 500,000 ounces a year of gold production in the west of the continent. The Nyanzaga Gold Project has reported probable ore reserves of some 40.08 million tons grading at 2.02 grams per tons for 2.60 million ounces of gold.
Jeff Quartermaine, CEO of Perseus Mining, said that buying the interest in OreCorp represented a strategic investment for the company. “It provides an investment in an attractive African gold project located in a jurisdiction that has a long and successful history of gold mining,” he said on Monday.
“Perseus has the ability, should the opportunity arise, to deploy its engineering, development and operating expertise and balance sheet to meaningfully contribute to the successful development and operation of this project,” he said.
Quartermaine has said in the past his company was interested in expansion. Including cash reserves, bullion and undrawn debt facilities, the company has about $900m in firepower to “pursue opportunities that complement its existing asset portfolio”.
Commenting in its September quarter results announcement in October, Perseus said it was in “an excellent position” to either grow the business through “organic or inorganic means, or actively return capital to shareholders”. Elsewhere in its production update Perseus said it could also adopt “a more aggressive approach to capital management”, suggesting a special dividend.
Shares in the company gained 1.7% on the Australian Securities Exchange today. On a 12 month basis the stock is down nearly 21%.
In June, the company said it would defer an investment decision on its Meyas Sand Gold Project in Sudan following the outbreak of hostilities in the North African country. Perseus took control of Meyas Sand in February after buying the shares of Toronto-listed Orca Mining for A$230m. The project’s Block 14 is scoped to produce 228,000 ounces of gold a year for the first seven years of a 13.5 life of mine.
