HQ Mining Resources Holding has launched an Aus$7.1 million takeover offer for junior Australian explorer Golden Cross Resources. HQ Mining, which already has a 23.4% share in ASX-listed Golden Cross, is based in Sydney and is a subsidiary of Hong Kong Longming Investment Group.
HQ is offering Golden Cross shareholders $0.07 per share, which represents a 20.7% premium to the closing price of Golden Cross shares on the day before the takeover offer was flagged in October this year and a 21.6% premium to the 30-day volume weighted average price of Golden Cross shares.
HQ Mining has told Golden Cross shareholders that the all-cash offer provides certain value for their shareholding and will enable accepting shareholders to avoid subscribing for more capital or their shareholding being diluted.
In December 2008, HQ invested in Golden Cross through placements and convertible bonds. HQ's managing director Dr Steven Xiao also became an executive director of Golden Cross, responsible for new business development.
In a statement released on November 17 HQ says that accepting shareholders will avoid the short-term risks associated with Golden Cross having to finalize funding for the pre-feasibility of its Copper Hill mine, the mid-term risk associated with Golden Cross having to secure around Aus$130.5 million to $163.5 million for construction of a 2-3 million tonne concentrator process plant at Copper Hill, and the long-term operating and project development risks associated with being a shareholder in Golden Cross.
Golden Cross earlier flagged the possibility of raising Aus$2.45 million to fund a pre-feasibility study on the Copper Hill Copper/Gold project, near the town of Molong in Central West New South Wales. It was hoping to place up to 20 million shares to raise an initial Aus$1.4 million, while contracts for services to conduct the study would also be funded through the issue of up to 15 million shares.
HQ Mining’s takeover offer is subject to a number of conditions, including a 50.1% minimum acceptance condition and Foreign Investment Review Board approval. It is also conditional on Golden Cross shareholders not approving the issue of any new securities before the end of the offer period