Avesoro Resources Inc. shares surged over 25% in London morning trade Aug. 20 after it reported receiving a nonbinding expression of interest for a full takeover from 72.9% shareholder Avesoro Jersey Ltd.
The controlling shareholder's offer to acquire all of the shares it does not own at £1 per share has the support of an additional 12.9% of Avesoro Resources' investors. The company had been in talks with its major shareholder over a working capital facility for short-term liquidity prior to receiving the offer.
The board formed a special committee to review the proposal and identify alternatives for the company, according to a news release.
Additionally, the company suspended its revised gold production guidance of 180,000 to 200,000 ounces due to ongoing issues at its Youga mine in Burkina Faso and the New Liberty mine in Liberia. Gold production for July and August is expected to be about 16,000 ounces, with full year output expected to be "materially reduced" from projections.
Avesoro Resources said it restarted milling and mining operations at its Youga gold mine in Burkina Faso, which was sealed recently after a security guard killed an intruder and locals attacked the site to retaliate. However, a detailed assessment of the damage incurred to property during the incident confirmed that a number of haul trucks, excavators and auxiliary equipment within the heavy mining equipment fleet were vandalized beyond repair.
The company said its mining contractor, Orkun Group SARL, has starting shipping additional equipment to Youga, which is expected to improve the situation to some extent. Meanwhile, Avesoro will review the longer-term viability of mining operations at Youga.
At the New Liberty mine, the company will not be able to access ore before early September, subject to the amount of additional rainfall until that time, and gold shipments in August are expected to be under 1,000 ounces.
Dewatering of the mine's main pit, previously expected to take 10 days, was delayed due to additional rainfall.
Avesoro's funding gap for the second half has expanded by at least US$10 million due to the operational issues, from the previously expected shortfall of US$10 million to US$15 million.
The company said it is in discussions with Avesoro Jersey for a working capital loan to continue operations in the near-term.
Meanwhile, Avesoro is relying on extended credit from suppliers at its mines but will require new capital soon to satisfy its debts.
The cash requirement is under review and will depend on the revised production and cost guidance, the company noted.
