Premier’s Sedimentary acquisition erodes

Recent Wolfden Resources (WLF-T, WLFFF-O) gold spin-off Premier Gold Mines (PG-T, PIRGF-O) has decided not to proceed with its planned acquisition of Australian-based junior explorer Sedimentary Holdings (SED-A).

Premier’s reversal follows discussions with shareholders who were unhappy with the debt and dilution the all-cash, A$87.5-million acquisition would require.

Sedimentary said it was disappointed with this situation and its “inability to provide Sedimentary shareholders with full details of the status of Premier’s financing position.”

In mid-August, just three days after its formation, Premier tabled a A31-per-share bid for Sedimentary, which holds a 30% interest in the Cracow gold mine in Queensland, where Newcrest Mining (NCMGY-O, NCM-A) is the operator. Cracow produced 21,000 oz. during the three months ended June 30. Sedimentary also owns a 10% interest in Intrepid Mines (IAU-T, IAUFF-O).

Premier’s offer, which translated to A$31 per share, trumped an existing takeover bid by fellow Aussie AuSelect (AUS-A), which is offering 0.22 of one of its own shares for each share of Sedimentary. At the time, AuSelect’s offer valued each share of Sedimentary at around A29.

As it stands, AuSelect says that around 13.5% of Sedimentary’s shares have so far been tendered to its offer. The haul boosts the bidder’s stake to 15.6%. Lion Selection Group has also said it will tender its entire 23.7% stake in Sedimentary.

AuSelect has extended its bid by a week until Sept. 8.

Lion Manager manages both AuSelect and Lion Selection Group. Lion Manager largest shareholder is Robin Widdup, the CEO of AuSelect and Lion.

Meanwhile, Sedimentary says talks with several other potential bidders continue. Sedimentary says the interested parties include a global gold mining company with a market capitalization exceeding A$1 billion.

Premier was formed to hold Wolfden’s northwestern Ontario gold projects, including two joint venture project’s with Goldcorp (G-T, GG-N) in the Red Lake gold camp.

Shares in Premier were a dime, or 9.5%, better at $1.15 in late-morning trading in Toronto following the news on Sept. 1. In Australia, AuSelect ended 12, or 8.5%, lower at A$1.30, while Sedimentary dropped half a penny to A29.5.