Foreign firms locked in battle for key Tanzania gold project

Dar es Salaam. Two foreign mining firms – SilverCorp Metals Inc of Canada and Australia’s Perseus Mining Limited – are locked in a battle for the control of the Nyanzaga gold project in Mwanza Region.

The Citizen has established that the tug of war dates back to August 2023 when OreCorp Limited, the project’s majority owner, sought financial support to develop the project. SilverCorp responded by making an all-cash offer to acquire OreCorp’s shares in the project.

The offer of 0.15 Australian dollar per share, made through a plan of arrangement, was submitted to the Fair Competition Board (FCC).

A plan of arrangement is a statutory procedure used to, among other objectives, effect a friendly takeover of a public company without having to go through formal takeover bid requirements pursuant to securities legislation.

The FCC had approved the transaction by November 3, 2023 and SilverCorp received a merger clearance certificate.

But on November 23, 2024, SilverCorp raised its bid from 0.15 to 0.19 Australian dollar per share.

However, four days after SilverCorp’s announcement, Perseus Mining Limited announced that it had increased its stake from 15.03 percent to 19.9 percent in OreCorp as a strategic equity investment, making it the largest shareholder.

Perseus’ announcement prompted SilverCorp to safeguard its interests by entering into a bid implementation deed with OreCorp.

A bid implementation deed is an agreement signed by the bidder and targeted firm that sets out key terms and conditions on which the former (bidder) agrees to bid for the latter (targeted firm).

Under this agreement, SilverCorp committed to acquiring all OreCorp shares not already owned by SilverCorp at 0.19 Australian dollar per share, contingent upon SilverCorp attaining a relevant interest in at least 50.1 percent of OreCorp shares.

Silvercorp and OreCorp terminated their Scheme Implementation Deed in conjunction with executing the Bid Implementation Deed.

On January 15, 2024, SilverCorp dispatched the offer document that was open for acceptance until February 23, 2024.

But in a new twist, Perseus announced on January 22, 2024 a takeover bid for OreCorp at 0.55 Australian dollar per share, representing a four percent premium over SilverCorp’s offer.

Perseus’s conditions mirror SilverCorp’s, including acquiring 50.1 percent of OreCorp’s shares.

Perseus executive chairman and chief executive Jeff Quartermaine said in a statement that the acquisition of OreCorp’s shares aligns with Perseus’s growth strategy of building an asset portfolio comprised of geopolitically diverse, high-quality gold assets located on the African continent.

“At the same time, this offer is demonstrably superior to the Silvercorp takeover in terms of price, based on recent Silvercorp trading and in terms of consideration certainty, being an all-cash. In other words, it would ensure that OreCorp’s shareholders receive full value and certainty for their shares in OreCorp,” he said.

In another development, Silvercorp said on February 2, 2024 that the FCC had provided unconditional approval of its offer.

All OreCorp directors have accepted the Silvercorp offer and continue to recommend that shareholders accept the offer in the absence of a superior proposal.

The offer is now scheduled to close on March 8, 2024, having been extended from February 23, 2024, unless further extended or withdrawn under the Corporations Act.

As the tug of war over the Nyanzaga project intensifies, stakeholders have expressed their concerns about its implications on Tanzania’s economic growth trajectory.

Pending is also the FCC approval for the merger application from Perseus Mining Limited to acquire OreCorp Limited.

According to the public notice published by the state-owned paper Daily News on Tuesday, February 6, 2024, the FCC confirmed receiving the acquisition application and that it’s currently reviewing and investigating the intended acquisition in adherence to fair competition laws.

Stakeholders advise that with so much at stake, swift and timely action from the FCC would instill confidence in investors, facilitate strategic planning by the companies involved, and ensure continued momentum in the project's advancement.

Procurement and supply chain expert Humphrey Simba told The Citizen that the battle is likely to have an impact on job creation and revenue collection endeavours.

“Delays in the project’s implementation will result in missed job opportunities for local communities and impact the government’s hopes for a new revenue stream,” he said.

Mr Simba added that two foreign mining companies fighting over a Tanzanian mining asset is not something the government should take lightly as time is of the essence when it comes to such key investment projects.

The Nyanzaga gold project is located about 60 kilometres southwest of Mwanza City and production is scheduled to commence in the second half of 2025.

An estimated 2.5 million ounces of gold are expected to be produced over a 10.7-year lifespan.