Russia’s Nordgold Makes 140% Premium Offer to Buy Canada’s Carlisle Goldfields

Posted: November 14, 2014 in Econ 101, Sanctions on Russia Meaningless

SOURCE: http://www.miningweekly.com/article/russias-nord-gold-makes-140-premium-bid-to-buy-canadas-carlisle-goldfields-2014-11-14

SEE ALSO:  Ukraine’s Oleg Mkrtchan Buys 18.5% In Russia’s Gold Producer Polyus


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Russia’s Nordgold makes 140% premium bid to buy Canada’s Carlisle Goldfields

14th November 2014       By: Henry Lazenby

TORONTO (miningweekly.com) – Russian multinational gold miner Nordgold on Thursday asked permission from the board of Canadian explorer Carlisle Goldfields to accept a C$27.3-million takeover offer.

Under terms of the offer, Carlisle shareholders would receive C$0.096 in cash – a 140% premium over Carlisle’s TSX-listed stock on Tuesday.

Carlisle owns the Lynn Lake gold camp, a gold project in Manitoba, Canada, which has high-grade, nonrefractory ore resources suitable for openpit mining and is located close to existing infrastructure and in a mining-friendly jurisdiction.

Carlisle responded, saying that Nordgold’s announcement on Thursday violated a mutual confidentiality agreement inked several months ago, in which both companies agreed that for two years neither party would, without the express written consent of the other party, among other things, offer to acquire or announce an intention to offer to acquire or effect a take-over bid of the other party.

Nevertheless, Carlisle, which on Tuesday agreed that TSX- and NYSE-listed AuRico Gold would subscribe for 70.6-million Carlisle shares and earn a 25% stake in the Lynn Lake gold camp, explained  that it was reviewing Nordgold’s request and its contractual obligations under the mutual confidentiality agreement and would respond in due course.

Carlisle had in February published the results of an optimised preliminary economic assessment on the Lynn Lake gold camp, which indicated an after-tax net present value, at a 5% discount, of $257-million, and an internal rate of return of 26%.

The report assumed a gold price of $1 100/oz, which would have resulted in the initial capital costs of $185-million to be paid back in 2.8 years.

The mine plan envisioned an initial 3 750 t/d mill, ramping up to 7 500 t/d at full capacity, to process ore grading 2.2 g/t over the 12-year mine life. The yearly gold output was estimated at 145 000 oz, with life-of-mine output expected to be 1.74-million ounces of gold and 1.59-million ounces of silver.

AuRico had last week reported a $15.7-million loss for the third quarter as production costs rose and gold prices fell.

Carlisle’s TSX-listed stock rose by one-third to C$0.06 apiece on Thursday.

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