29th Feb 2016 08:57
LONDON (Alliance News) - Amara Mining PLC Monday said it plans to merge with Perseus Mining Ltd to create a mid-tier gold producing company focused on West Africa.
The pair have agreed terms of the potential deal, which will see Perseus acquire Amara in return for new shares and warrants in Perseus being issued to Amara shareholders.
Under the terms, Amara shareholders would hold 35.1% of the issued share capital of the combined entity, which will retain the Perseus name.
Amara shareholders would receive 0.68 Perseus shares and 0.34 warrants over Perseus shares for each Amara share they hold. Each warrant can be exercised into a new Perseus share at a price of AUD0.44 within 36 months of being issued.
Amara said the combination values the entire issued share capital of Amara at around GBP68.3 million. Excluding the warrants, the combination price represents over a 42% premium to the closing price of 10.3 pence per Amara share prior the deal being announced Monday.
Amara shares were trading up 25% to 12.85 pence per share on Monday morning, with its market capitalisation standing at around GBP53.6 million.
The value of the warrants represents an additional premium of around 16.4% to that 10.3p closing price. If all of the warrants are exercised, the combined group would benefit from additional equity funding of around AUD62.9 million, said Amara.
If all of he warrants are exercised, Amara shareholders would then hold 44.8% of the enlarged issued share capital of the combined group.
Amara said the combined group would have a portfolio comprised of the Edikan gold mine in Ghana, the Yaoure gold project in the Ivory Coast and further opportunities through the Sissingue and Baomahun gold projects, which are also in the Ivory Coast.
Edikan, which belongs to Perseus, produced 212,135 ounces of gold in the year to the end of June 2015, and is expected to produce cashflow to allow the combined group to develop Amara's Yaoure gold project.
Perseus had net working capital of AUD164.9 million at the end of 2015.
"We believe that a business combination with Perseus will unlock the value of Yaoure and deliver the optimal outcome for the project and Amara's shareholders. Perseus has the strong balance sheet to move Yaoure into production and an experienced operating team. This deal therefore addresses two of the major risks facing a junior developer, namely financing risk and the move from developer to producer, and I see this as a win-win for both companies," said John McGloin, chairman and chief executive of Amara.
By Joshua Warner; [email protected]; @JoshAlliance
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