It was already widely expected after Perseus Mining (PRU.AX, PRU.TO) announced it had acquired a stake in Orca Gold earlier this year, but the Africa-focused gold producer has now made a formal offer to acquire the shares in Orca Gold (ORG.V) it didn’t own yet in an all-share deal.
Perseus is offering 0.56 of its own shares for each share in Orca Gold (so an investor owning 1,000 shares in Orca Gold will end up with 560 shares of Perseus Mining if the offer goes through. And with 37% of the shares having entered into voting support agreements it seems to be quite likely this deal goes through as this provides a good exit for the Sudan-focused company. The shareholders meeting will be held in May and the acquisition will likely close in early June.
Once the deal closes, Perseus Mining will suddenly become a 31% shareholder in Montage Gold (MAU.V) which makes Montage an attractive acquisition target down the road as the current market capitalization is just under C$75M. This means that the 58.6% now owned by Perseus Mining is currently worth less than C$45M making it easy enough for Perseus to pursue – if it wants to continue to build its presence in Africa. With two producing assets in Cote D’Ivoire, there would be plenty of economies of scale for Perseus to pursue Montage.
Disclosure: The author has a very small long position in Orca Gold and will sell on the open market. Please read our disclaimer.
