African Mining Network

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AMN - M AND A: Shandong Gold makes offer for Cardinal

Cardinal Resources Ltd has received a cash takeover offer from Shandong Gold Mining Co Ltd at A$0.60 per share, which represents a 75.5% premium to its 20-day unaffected ASX volume-weighted average price. The offer from the global Chinese gold producer is also a 39.3% premium to Cardinal’s 20-day volume-weighted average price up to June 18, 2020,

This offer follows a non-binding indicative proposal announced by Nord Gold SE on March 16, 2020, of 45.775 cents per share and the Shandong offer is a 31.1% premium on that proposal.

Cardinal’s board unanimously recommends that all Cardinal shareholders accept the Shandong Gold offer in the absence of a superior proposal.

Chief executive officer and managing director Archie Koimtsidis said: “The Board of Directors of Cardinal has negotiated what we consider a strong offer for our shareholders and one which delivers a significant premium to Cardinal’s market price, at a time of considerable volatility and uncertainty in global markets.

“This is an opportunity for shareholders to crystallise their investment in Cardinal at an attractive price.

"I am pleased that Shandong Gold is committed to getting on with development of Namdini to establish the first long-life gold mine in the Upper East Region of Ghana, bringing many significant and long-lasting benefits to the local community and Ghana

“The Cardinal team is looking forward to working with Shandong Gold and its advisors to implement the transaction delivering a seamless transition as Shandong Gold embarks on the next steps towards this world-class development.”

The transaction will deliver several key benefits to shareholders including:

  • By accepting the offer, subject to it going unconditional, Cardinal shareholders will receive cash consideration of 60 cents for every share they own;
  • The all-cash offer is not subject to any financing conditions; and
  • The offer eliminates exposure to the financing, operational and regulatory risks inherent in any new mine development.

Shandong Gold chairman Li Guohong said: “We have tremendous respect for the Cardinal organisation for the manner in which it has advanced Namdini to its current development status.

“We are conscious of the strong working relationship Cardinal has developed with its local Ghanaian community over many years and how important the development of Namdini is to both the local community and to the country of Ghana.

“We look forward to working closely with stakeholders, the local communities and the Government of Ghana to deliver the Namdini Project that will create employment and deliver many significant benefits for the regional economy and Ghanaians for many years to come.”

The Shandong Gold offer is subject to a limited number of conditions including a 50.1% minimum acceptance by Cardinal shareholders and Foreign Investment Review Board (FIRB) approval.

The agreement is also subject to the approval of several Chinese regulatory bodies including:

  • The National Development and Reform Commission of the People’s Republic of China (or its relevant local branch);
  • The Ministry of Commerce of the People’s Republic of China (or its relevant local branch); and
  • The State Administration of Foreign Exchange of the People’s Republic of China (or its relevant local branch).

Cardinal has agreed it will not solicit any competing proposal or participate in any discussions or negotiations in relation to any competing proposal unless failure to do so would be a breach of the fiduciary or statutory duties of the Cardinal directors; in which case an agreed break fee or reverse break fee of $3.3 million will be payable.

Shandong Gold has agreed to provide Cardinal with interim funding of $11.96 million by subscribing for 26 million ordinary shares at an issue price of 46 cents per share.

Shareholder approval is not required for the placement, however, it is subject to and conditional upon no competing proposal being received by Cardinal, which the Cardinal Board of Directors considers is superior to the Shandong Gold offer within 14 days from entering into the BIA.

The funds will be used to ensure Cardinal may continue advancing the Namdini project towards development and for working capital prior to closing of the transaction.