Primary Gold Ltd. shares jumped over 28% on the ASX on Feb. 21 after the company agreed to a conditional takeover offer from China Hanking Holdings Ltd., which already has about an 8.4% stake in the company.
China Hanking subsidiary Hanking Australia Investment Pty. Ltd. will acquire all of Primary Gold's issued shares at 5.75 Australian cents apiece, valuing the shares at approximately A$37.5 million. The offer price represents a 36.9% premium to the 30-day, volume-weighted average price of Primary Gold shares for the period up to Feb. 16.
The offer period is scheduled to close April 17, unless extended, with the deal expected to close shortly thereafter.
Hanking Australia also agreed to advance an unsecured A$1.5 million loan facility to help Primary Gold with immediate funding needs. The loan is repayable three months after the offer closes unless the takeover deal is terminated.
"Following the company's successful sale of its Southern Cross operations in Western Australia in April 2017 for A$330 million after a successful period of exploration, feasibility studies, mine development and gold production, the company considers the offer to be consistent with its vision to develop a sustainable long term Australian gold business," China Hanking said in a Feb. 20 release.
The independent directors of Primary Gold unanimously recommended that its shareholders accept the offer, in the absence of a superior proposal and subject to an independent expert's opinion.
Primary Gold's main assets include the Mount Bundy gold property in Australia's Northern Territory.