Ramelius Resources lobs $2.4bn bid for fellow West Australian gold miner Spartan Resources
5 hours ago
Ramelius Resources has agreed to buy West Australian gold miner Spartan Resources, winning over its smaller rival with a $2.4bn takeover bid.
Ramelius is offering 25c per share in cash and 0.6957 new Ramelius shares for each Spartan share, valuing the target at $1.78 per share — an 11.3 per cent premium to Spartan’s closing price of $1.60 on Friday.
The scheme is supported by Spartan’s board, as well as its three largest shareholders — Tembo Capital, 1832 Asset Management and Fourth Sail Capital — who collectively own 18.9 per cent of the company.
With a $4.2bn valuation, the combined group would become the largest mid-tier, pure play gold producer on the ASX, behind the two dominant players — Northern Star and Evolution Mining.
Spartan Resources’ flagship Dalgaranga Gold Project is located 475km northeast of Perth and around 65km northwest of Ramelius’s Mt Magnet mine. The bid comes with an ambition to grow annual production to 500,000 ounces by 2029-30.
Speaking to investors following the announcement of the deal on Monday, Ramelius managing director Mark Zeptner and Spartan executive chairman Simon Lawson talked up the opportunity to bring together the operational expertise and large mineral resource of Ramelius with Spartan’s exploration expertise and additional processing capacity at Dalgaranga.
“The merger of the two companies will create a leading Australian gold producer with a supercharged growth profile and exceptional exploration upside,” Mr Zeptner said.
“The combination matches Spartan’s excess processing capacity and high grade mineral resource with Ramelius’s large mineral resource, current operating plan and tier one operational team.”
The combined group will have estimated gold reserves of 2.6 million ounces.
As part of the deal, high grade ore from Spartan’s Never Never and Pepper gold deposits at Dalgaranga will be sent to Ramelius’s processing facility at Mt Magnet before a potential restart of production at the Dalgaranga plant, which is currently under care and maintenance.
Ramelius is also exploring a potential capacity upgrade at Mt Magnet to support a revised mine plan released to the market last week.
The update, which included lower production and higher-than-expected capital expenditure forecasts, disappointed shareholders, and sent the company’s shares 17 per cent lower.
Spartan has overcome its own issues at Dalgaranga, which previously produced more than 70,000 ounces of gold in 2022 before the processing plant was placed under care and maintenance in November of that year.
The project was subject to a strategic review, leading to an aggressive exploration campaign that has since revealed a series of high grade prospects.
Mr Lawson said Spartan shareholders would benefit from an exposure to Ramelius’s highly prospective WA assets.
“I think we’ve proven pretty categorically you can take mature gold fields and find new discoveries,” he told investors.
“I’m looking forward to getting right into the detail, particularly at Mt Magnet … I think there’s a lot of ground to be tested there, and I think Mark and I are aligned on that.”
Ramelius has been pursuing acquisition opportunities amid a record run in the gold price, which pushed past $US3000 ($4740) per ounce for the first time ever last week as global economic instability drives more investors to the safe haven asset.
SPR Price at posting:
$1.75 Sentiment: None Disclosure: Held
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