Profile shots of Ramelius Resources managing director Mark Zeptner. Credit: Michael Wilson/The West Australian
It’s clear there’s no love lost between gold rivals Westgold Resources and Ramelius Resources. Sources claim the genesis of the tension came a year ago via an unassuming junior explorer.
Ramelius dropped a bombshell on Wednesday by lodging an application with the Takeover’s Panel that throws a spanner in the works of Westgold’s $2.2 billion proposed merger with Canada’s Karora Resources.
Ramelius was pursuing Karora first, but the takeover target has now fallen into the arms of Westgold. Multiple sources close to Ramelius and Westgold have told The West Australian that the root of animosity between the duo runs deeper than Karora.
Westgold in early June lobbed a $177.3 million takeover offer for gold hopeful Musgrave Minerals, which was not without controversy.
The Wayne Bramwell-helmed Westgold claimed the confidentiality of its approach had been breached, pointing to Musgrave’s share price spiking in the days leading up to the proposal being made public.
Westgold based its takeover premium on what it deemed to be the pre-leak price and Musgrave promptly rejected the offer.
Mark Zeptner’s Ramelius then muscled in a month later and ultimately nabbed Musgrave for $201m.
Sources say Westgold was reticent to engage in a bidding war with Ramelius, or stick the boot into Musgrave further for having a leaky ship, because Westgold was led to believe a tie-up with Musgrave’s new owner was on the cards.
A spokesman for Westgold told The West on Thursday it bailed out of the Musgrave acquisition because it “didn’t see the value at that price”.
Westgold and Ramelius, two gold mining mainstays in the Murchison region of WA, signed a “mutual confidentiality deed” in November but negotiations over a potential merger broke down.
Ramelius was on the rebound quickly and hunting for Karora, leaving a scorned Westgold in its wake.
In March Ramelius’ early-stage discussions with Karora were leaked to another media outlet.
The article in question included an extremely low sticker price range of between $700m and $1b. The upper end of that range was nearly below its actual market capitalisation at the time of $945m.
Sources believe the leak came from the Westgold camp and it purposely spoon-fed a low-ball figure.
By doing this, once the actual figure were to come out it would appear that Ramelius was overpaying for Karora.
This would subsequently reduce the chances that Ramelius’ shareholders would be onside with the acquisition going ahead.
Ramelius took to the ASX to seemingly reset market expectations, noting the variance between Karora’s market cap and the suggested purchase range.
The West at the time reported the proposed acquisition would come at a premium, as is customary with the vast majority of takeovers, likely pushing Karora’s sticker price past the $1b-mark.
By the end of March Ramelius pulled the pin and the experience clearly left a bitter taste in Mr Zeptner’s mouth.
When asked by The West why the Karora deal disintegrated, the normally easy-going and candid Ramelius boss responded by stating “the less said about it the better”.
Days after that interview during the first week of April Westgold and Karora would announce they had shaken hands to combine.
To complicate matters, the duo had already signed a confidentiality agreement in January. Ramelius is now effectively frozen out from lobbing another bid for either Westgold or Karora.
The Westgold spokesman said the company is “100 per cent committed to the merger” with Karora.
Ramelius declined to comment.
WGX Price at posting:
$2.31 Sentiment: None Disclosure: Not Held
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