Australian gold producer, Northern Star Resources Limited (ASX: NST) made an announcement on 31 December 2018 stating that it has received written rejections of the legally binding offers which were made by Northern Star for the acquisition of 49 percent stake in the East Kundana Joint Venture (EKJV) it does not already own.
Earlier on 13 November 2018, Northern Star had made legally binding offers to Tribune Resources Limited (ASX: TBR), Rand Mining Limited (ASX: RND) and Rand Exploration NL to acquire 49 percent interest in EKJV for a total consideration of AUD$150 million in cash.
Northern Star had made an unsolicited $37.5 million offer for Rand Mining and Rand Exploration’s 12.25% interest in the EKJV and an unsolicited offer for Tribune Resources Ltd.'s 36.75% interest in the EKJV for a consideration of $112.5 million.
However, now both the companies have rejected the Northern Star offer, and the proposed transactions have not been put to the Tribune or Rand shareholders for consideration. The Rand’s Board of Directors has resolved to reject the Offer and concluded that the Offer significantly undervalues Rand's interest in the EKJV. Similarly, the Tribune Board has also rejected the Offer and has concluded that the Offer substantially undervalues Tribune's interest in the EKJV. While taking the decision to reject the offers, both the Companies have considered the financial advice which is provided by their financial adviser, Argonaut.
Although both the companies have rejected the proposals, Northern Star still believes that its cash offer is a fair and sensible pathway for Tribune and Rand’s shareholders to unlock the value of their company’s stake in the EKJV. Currently, Northern Star is having 51% interest in EKJV, and Tribune and Rand hold remaining interest.
Recently on 20 December 2018, Northern Star provided its exploration update in which the company announced strong exploration results which are going to help the company in laying the foundations for a further significant increase in inventory and mine lives across the company’s operations in Australia. Recent drilling results at Kanowna Belle is supporting the company’s growing view that the Velvet lode at Kanowna Belle is going to link back to the Lowes deposit supported by the discovery of multiple mineralized structures down plunge from Velvet.
At Kundana EJKV, the in-mine extensional drilling across the Rubicon-Hornet-Pegasus mining complex have extended the mineralized Pode system and the main K2 structure northwards and down-plunge from Pegasus.
As per Northern Star Executive’s Chairman Bill Beament, based on the exploration results and the exploration activity which are planned for the next six months, the company expects to generate substantial increases in its Resources and convert more of them into Reserves by the middle of 2019.
In the last six months, the share price of NST decreased by 28.51 percent as on 28 December 2018. NST’s shares traded at $9.240 with a market capitalization of circa $5.91 billion as on 31 December 2018 (AEST 12:30 PM).
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