Vancouver – Russian steel giant Severstal (CHMF-L) has entered into a binding agreement to buy junior gold explorer Sacre-Coeur Minerals (SCM-V) not long after securing majority ownership of Crew Gold (CRU-T).
The Sacre-Coeur deal has Severstal’s gold division buying all outstanding shares of the Guyana-focused company for $1.60 each in a deal worth roughly $65 million.
The bid represents an 88% premium over the company’s average 20-day closing price ending Sept. 7. On Sept. 8 Sacre-Coeur announced that it was considering a proposed takeover bid from an unidentified buyer, causing the company’s share price to climb 41¢ in 3 days to $1.31.
On Sept. 22, the day the binding agreement was announced, Sacre-Coeur’s share price jumped 44¢ or 39.3% to close at $1.56 on 14.9 million shares traded.
The board of directors of Sacre-Coeur have approved the deal, while the transaction is still subject to due diligence. The deal also requires a 2/3rds majority in a shareholder vote expected in November.
Sacre-Coeur holds almost 1000-sq.-km of permits in four gold targets in Guyana. The company’s most advanced project, the Million Mountain property, hosts a 2008 resource estimate of 12.1 million measured tonnes grading 1 gram gold per tonne and 2.2 million indicated tonnes grading 0.9 gram gold for a total of 451,400 contained oz. gold.
The announcement marks the second recent gold investment for Severstal’s subsidiary, Severstal Gold, which last week bought a 43% stake in Guinea-focused Crew Gold. Severstal now owns 93.3% of Crew.
The deal had Severstal buying all of Endeavour Mining’s (EDV-T) 46.2 million shares of Crew for a total cost of US$215 million, which Endeavour had acquired for US$134.5 million.
The two companies fought a bitter dispute over control of Crew earlier this year, going so far as to complain to the British Columbia Securities Commission about each other’s activities. Severstal had its concerns heard in a 3-person BCSC panel in March, which dismissed its complaints, while Endeavour later requested an investigation into Severstal’s activities.
In June the companies reached a deal on issues, including the composition of Crew’s board of directors and Endeavour dropped its request for an investigation.
Crew’s biggest asset is the Lefa mine in Guinea, with reserves of 65.9 million tonnes grading 1.4 grams gold for 3 million contained oz.
Severstal established a gold division in 2007 and now has gold assets in Russia, Kazakhstan, Guinea and Burkina Faso. Sacre-Coeur marks Severstal Gold’s first South American acquisition.
Before announcing the Sacre-Coeur acquisition, the company reported having eight producing mines, two development projects, and a number of exploration projects. As of July 1 the company had 9 million proven and probable oz. gold.
The company expects to produce roughly 655,000 oz. gold this year, with plans to increase production to a million oz. within three years. Severstal Gold plans to spend over US$100 million on exploration and resource evaluation spending next year.
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