Cardinal Resources higher on fielding cash takeover offer from Shandong Gold at A$0.60 per share

Cardinal Resources Ltd (ASX:CDV) has surged after receiving a cash takeover offer from Shandong Gold Mining Co Ltd (HKG:1787) at A$0.60 per share, which represents a 75.5% premium to its 20-day unaffected volume-weighted average price.

This offer from the global Chinese gold producer is also a 39.3% premium to Cardinals 20-day volume-weighted average price up to June 18, 2020, and a 31.1% premium on the non-binding indicative proposal announced by Nord Gold SE on March 16, 2020, of 45.775 cents per share.

The bid implementation agreement (BIA) sparked a 29% surge in Cardinal's shares in early trading to a new 12-month high of 60 cents.

Shares are now trading more than 27% higher than the previous close at 59.2 cents and have traded in the range of 57.5 cents to 60 cents on volume of more than 9.5 million.

“Strong offer for shareholders”

Cardinals Board of Directors unanimously recommends that all Cardinal shareholders accept the Shandong Gold offer in the absence of a superior proposal.

Chief executive officer and managing director Archie Koimtsidis said: “The Board of Directors of Cardinal has negotiated what we consider a strong offer for our shareholders and one which delivers a significant premium to Cardinals market price, at a time of considerable volatility and uncertainty in global markets.

“This is an opportunity for shareholders to crystalise their investment in Cardinal at an attractive price.

"I am pleased that Shandong Gold is committed to getting on with development of Namdini to establish the first long-life gold mine in the Upper East Region of Ghana, bringing many significant and long-lasting benefits to the local community and Ghana

“The Cardinal team is looking forward to working with Shandong Gold and its advisors to implement the transaction delivering a seamless transition as Shandong Gold embarks on the next steps towards this world-class development.”

Benefits for stakeholders

The transaction will deliver several key benefits to shareholders including:

  • By accepting the offer, subject to it going unconditional, Cardinal shareholders will receive cash consideration of 60 cents for every share they own;
  • The all-cash offer is not subject to any financing conditions; and
  • The offer eliminates exposure to the financing, operational and regulatory risks inherent in any new mine development.

Detailed information relating to the offer will be set out in the Bidders Statement and Targets Statement, which is expected to be dispatched to Cardinal shareholders on or about July 21, 2020.

Offer conditions

The Shandong Gold offer is subject to a limited number of conditions including a 50.1% minimum acceptance by Cardinal shareholders and Foreign Investment Review Board (FIRB) approval.

The agreement is also subject to the approval of several Chinese regulatory bodies including:

  • The National Development and Reform Commission of the Peoples Republic of China (or its relevant local branch);
  • The Ministry of Commerce of the Peoples Republic of China (or its relevant local branch); and
  • The State Administration of Foreign Exchange of the Peoples Republic of China (or its relevant local branch).

Cardinal has agreed it will not solicit any competing proposal or participate in any discussions or negotiations in relation to any competing proposal unless failure to do so would be a breach of the fiduciary or statutory duties of the Cardinal directors; in which case an agreed break fee or reverse break fee of $3.3 million will be payable.

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