Geopacific Resources is making an off-market takeover offer for Kula Gold, its joint venture partner in the Woodlark Gold Project in Papua New Guinea. The offer is one Geopacific share for every 1.4723 Kula shares.
In a statement Geopacific said the offer would allow Kula’s shareholders to continue their economic participation in the development of the Woodlark project, which is on Woodlark Island in the country’s far east.
In July 2016 the Board of Kula announced that Geopacific had been chosen to advance Woodlark in a joint venture transaction. This allows Geopacific to earn up to an 80% interest in Kula’s subsidiary company Woodlark Mining Limited, which holds all Woodlark assets, by meeting milestones over a period of up to four years.
The first stage of Geopacific advancing this plan involved it conducting due diligence on Woodlark and preparing a development plan. This stage was completed last October and Geopacific is progressing towards the next milestone – advancing Woodlark with economic studies and a development drilling program.
Having advanced to this point, Geopacific says it now believes there is compelling commercial logic in bringing the ownership of the project under a single management structure.
It believes the dual ownership structure causes inefficiencies for both sets of shareholders and diminishes the investment value to current and potential investors. It also duplicates governance, management and reporting structures, causing excess leakage of funds from development activities.
Geopacific’s managing director Ron Heeks said, Geopacific and Kula exist for the same ultimate objective of advancing the Woodlark Gold Project to development. However, the current dual ownership structure is inefficient and expensive, and a combined single entity is likely to be significantly more attractive for investors and financiers. Simplifying this structure is the next logical step in advancing the project for the benefit of the shareholders of both companies.”