With nearly 94 million shares, or about 81% of the company’s issued share capital already tendered, Meridian Gold (MNG-T) has extended its offer for shares of London-listed Brancote Holdings until July 3.
In early April, Meridian unveiled its plan to exchange 0.1886 of one of its own shares for each Brancote share, for a deal worth about US$300 million. Based on an April 3 closing price of US$13.56 per Meridian share, the offer values Brancote at 1.78, a premium of just 2% over its close on the day prior to the announcement. The offer is a 17.5% premium over Brancote’s closing price of 1.52 on March 7, the day before Brancote reported it was in preliminary discussions to be bought.
About 17 million or 18% of the shares tendered so far come from the directors of Brancote and Consolidated Press International, Brancote’s largest shareholder. Brancote’s board has unanimously recommended the deal to its shareholders.
Meridian’s interest in Brancote lies in the high-grade Esquel project in Argentina. Brancote currently has a 76.4% stake in Esquel, but would acquire the project outright with shares as part of the merger deal with Meridian.
Open-pit reserves at Esquel are pegged at about 2.8 million oz. gold and 4.8 million oz. silver contained within a diluted 11.5 million tonnes grading 7.59 grams gold and 13.06 grams silver at an overall stripping ratio of 9.9-to-1.
Meridian envisages Esquel as a 3,000-tonne-per-day operation producing 300,00 oz. of gold annually for 10 years. Cash costs are estimated at less than US$100 per oz.; total costs, at less than US$185 per oz. The project comes with an estimated US$90-million price tag.
The company intends to wrap up a feasibility study by the end of 2002.
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