A takeover bid has been launched by Placer Dome (PDG-T) for Highlands Gold, a Papua New Guinea-based company that owns 25% of the Porgera gold mine, and for the remaining 24.6% interest of subsidiary Placer Pacific.
The bid for Highlands Gold is a cash offer of A70 cents per share, and is conditional on three factors: there being no material change to operations of the company; the gold index of the Australian Stock Exchange remaining above 1,500 during the offer period; and the approval of the Bank of Papua New Guinea.
“This is about growth for Placer Dome shareholders and [it is] a golden opportunity for the shareholders of Highlands Gold and minority shareholders of Placer Pacific,” says John Willson, Placer’s president and chief executive officer. “We have great confidence in the Asia Pacific region.” Placer Dome already holds 33% of Highlands Gold, and the offer, according to Willson, represents a premium of more than 36% on the company’s share price on Nov. 26.
Placer Dome is also offering one Placer Dome share for every 15 Placer Pacific shares. Placer Pacific holds an indirect 6.1% in Porgera. The bid is conditional upon, among other factors, approval by Australia’s Foreign Investment Review Board.
Placer Dome currently holds an 18.9% stake in Porgera, which will climb to 50% in the wake of successful takeovers of the companies. That operation, a combined open-pit/underground mine, has produced more than 6 million oz. over six years.
Porgera’s total proven and probable reserves are estimated at 78.7 million tonnes grading 4.5 grams gold per tonne, equivalent to 11.5 million contained ounces. The project also hosts measured and indicated resources of an additional 16.4 million tonnes of 2.2 grams, based on a 1.5-gram cutoff.
Last year, Porgera produced 848,872 oz. at a cash cost of US$197 and a total cost of US$267 per oz.
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