AngloGold Ashanti submits offer to buy all of Corvus Gold

AngloGold Ashanti (NYSE: AU), which currently holds a 19.5% indirect interest in Corvus Gold (​TSX: KOR), has set its sights on expanding its mineral reserves through buying out Corvus and its entire portfolio of gold assets in Nevada.

The South Africa-based gold miner has submitted a non-binding proposal to acquire for cash all of the issued and outstanding common shares of Corvus that it does not already beneficially own for a total consideration of US$370 million.

The proposal follows the announcement by Corvus on May 6 that it had entered into a US$20 million unsecured loan and guaranty agreement with AngloGold’s North American subsidiary.

As a result of the loan agreement, AngloGold was granted an initial exclusivity period of 90 days, during which the company was allowed to conduct a detailed due diligence exercise on Corvus and its key assets. This initial exclusivity period would be extended by a further 30 days in the event AngloGold submits a letter of intent or proposal.

AngloGold’s offer, which values the common shares of Corvus at $4.00 each, represents a premium of about 55% to its share price of $2.58 recorded on the day prior to the loan agreement. It is also a premium of about 23% to the closing price prior to the submission of the proposal, and a premium of about 20% to the last 10-day volume weighted average price on the Toronto Stock Exchange.

At press time, Corvus Gold was trading at $3.25 a share. The company has a market cap of $412.6 million.

Corvus presently owns the North Bullfrog, Mother Lode and other exploration assets located in southern Nevada’s Beatty district, in close proximity to, or contiguous with, AngloGold’s exploration assets of Silicon, Transvaal and Rhyolite.

In making the offer, AngloGold said it believes the combination of the companies’ Nevada assets further consolidates one of the largest new gold districts in the world, with potential for “significant synergies from economies of scale and integrated infrastructure including processing facilities.”

“The proposal is fully aligned to our strategy of growing ore reserve, building low-cost production and generating sustainable returns. We have a unique opportunity to combine Corvus’ assets with our own – in the world’s top-ranked mining jurisdiction – to create a meaningful new production base for AngloGold Ashanti in the medium and longer term,” Christine Ramon, AngloGold’s interim CEO, stated in news release on July 13.