Northern Star Resources has confirmed it plans to acquire shares it does not already own in Echo Resources for approximately AU$193 million.
The acquisition of Echo will allow Northern Star to consolidate the mineralisation at the Yandal Gold Project in Western Australia for further evaluation on both an exploration and development basis. The acquisition of Echo will also provide Northern Star with the ability to process gold at the Bronzewing processing plant, currently under care and maintenance, if an evaluation of a restart is successful.
Under the terms of the offer, Northern Star will offer each Echo shareholder a cash offer of 33 cents (AU) for each remaining Echo share, which represents an 80 per cent premium on Echo’s 60-day volume weighted average price (VWAP).
Perth-based Northern Star is already Echo’s largest shareholder with a 21.7 per cent stake in the company.
The two companies have entered into a bid implementation agreement that will see Northern Star offer to acquire the remaining shares in Echo with an off-market takeover offer.
Northern Star is already Echo’s largest shareholder, with a relevant interest in approximately 21.7 per cent of the issued and outstanding ordinary shares.
The proposed offer values Echo at approximately AU$242.6 million and has been recommended by its board members independent of Northern Star.
As at 30 June 2019, Northern Star had cash and equivalents of AU$361.0 million and an undrawn debt facility of AU$200.0 million, which is well in excess of the Offer Amount and related transaction expenses.
Those Directors of Echo independent of Northern Star, in consultation with Echo’s financial and legal advisers, have unanimously recommended that Echo Shareholders accept the offer in the absence of a Superior Proposal.
Victor Rajasooriar, Managing Director and Chief Executive Officer of Echo, said the offer reflected the strategic nature of Echo’s Yandal Gold Project which has “a unique combination of mineralisation, untested exploration upside, established processing infrastructure at Bronzewing and a detailed feasibility study”.
“The Board of Echo is pleased to recommend the Offer to Echo Shareholders in the absence of a Superior Proposal”, commented Mr Rajasooriar.
“We look forward to working with Northern Star to implement the transaction.”