PERTH (miningweekly.com) – Gold miner Ramelius Resources has entered the fray for ownership of fellow-listed Musgrave Resources, offering one of its own shares for every 4.21 Musgrave shares held, as well as a 4c-a-share cash payment.

The offer valued Musgrave at A$201-million and valued the company’s shares at 34c each.

Ramelius’ offer for Musgrave comes days after ASX-listed Westgold Resources’ offer opened, under which it is offering one of its own shares for every 5.37 Musgrave shares held.

The directors of Musgrave have unanimously recommended that shareholders accept the Ramelius offer in the absence of a superior proposal, noting that the offer represented a 19% premium to the company’s closing price on June 30, a 47% premium to its 30-day volume weighted average share price and a 54% premium to its 60-day volume weighted average share price.

“The Musgrave board of directors is pleased to endorse Ramelius’ cash and scrip offer for the company in the absence of a superior proposal,” said Musgrave Minerals MD Robert Waugh on Monday.

“Ramelius is a reputable and well-respected Western Australian gold miner with a track record of operational excellence and delivering strong capital returns for shareholders. We are confident that the Cue project will be in good hands should the offer be successful and in the event that does occur, we would look forward to seeing the project contribute to the ongoing success of Ramelius’ Mt Magnet operations.

“By joining with Ramelius, Musgrave shareholders will have the opportunity to continue to share in the upside at the Cue project while accessing the benefits that come with being an owner of an established, profitable mining company. The cash component of the offer provides additional certainty.”

Musgrave’s Cue project is some 35 km from Ramelius’ Mt Magnet project, providing the opportunity for an integrated development scenario with enhanced commercial viability. The project would be incorporated into the Mt Magnet resource base, which stood at 3.2-million ounces as at the end of June 2022.

The Cue project hosts an estimated mineral resource of 12.3-million tonnes at 2.3 g/t gold for 927 000 oz of gold, including the high-grade Break of Day trend deposits, which contain 327 000 oz of gold.

A Stage 1 prefeasibility study (PFS), focusing on the southern component of the Cue mineral resource and contemplating the development of a 500 000 t/y standalone processing plant, was completed in April 2023.

The PFS estimated gold production of 337 000 oz over the five-year mine life, with the first three years averaging 80 000 oz/y. The study estimated that the project would require a capital investment of A$121-million to develop the 500 000 t/y operation, with the pay-back period estimated at nine months.

“The Checkers mill at Mt Magnet represents a natural processing option for ore from the Cue project, including the high-grade Break of Day ore,” said Ramelius MD Mark Zeptner on Monday.

“Subject to the offer being successful, Ramelius is looking forward to continuing drilling across the tenement package to expand the existing resource and ultimately developing the Cue project into a high-grade satellite mine for the Mt Magnet production centre, to maximise value for all shareholders. We also look forward to welcoming Musgrave shareholders as Ramelius shareholders and encourage Musgrave shareholders to accept the offer as soon as they are able to.”

The offer would be subject to a number of conditions, including a 50.1% minimum acceptance condition.

Meanwhile, Ramelius on Monday told its shareholders that it had reached its full year production guidance for the 2023 financial year, producing 240 996 oz of gold, which was in line with the guidance of between 240 000 oz and 150 000 oz. Full-year gold sales reached 243 263 oz.

In the quarter to June, gold production reached 68 752 oz, also in line with guidance, with the Mt Magnet operations contributing 45 380 oz and the Edna May operations producing 23 372 oz.