Prime
Fresh twist in foreign firms’ tussle for Tanzania gold project
The Nyanzaga gold project, which is at the centre of a tug of war involving Canadian and Australian mining firms, is expected to produce an estimated 2.5 million ounces of gold during its 10.7-year lifespan. PHOTO | FILE
What you need to know:
- The acquisition saga between two foreign mining firms, involving the Nyanzaga Gold Project in Tanzania, has taken a new turn after OreCorp Limited asked shareholders to reject the Perseus offer, citing regulatory uncertainties and potential superior proposals
Dar es Salaam. The acquisition saga between two foreign mining firms, involving the Nyanzaga Gold Project in Tanzania, has taken a new turn after OreCorp Limited asked shareholders to reject the Perseus offer, citing regulatory uncertainties and potential superior proposals.
In a statement issued by OreCorp Limited to its shareholders on Monday, executive chairman Matthew Yates said directors unanimously recommend that shareholders reject the Perseus Offer “by taking no further action”.
Announced on January 22, 2024, the Perseus offer period ends (unless extended or withdrawn) on March 19, 2024. The firm has offered to acquire all ordinary shares in OreCorp Limited for 0.55 Australian dollars per share.
However, before Perseus made its offer, another mining giant SilverCorp had already entered into a Bid Implementation Deed with OreCorp.
Under this agreement, SilverCorp proposed to acquire all of the OreCorp shares for a combination of 0.19 Australian dollars cash and 0.0967 SilverCorp shares per OreCorp share.
“The OreCorp Directors do not consider the Perseus Offer to be superior to the Silvercorp Offer and unanimously recommend that OreCorp Shareholders REJECT the Perseus Offer and ACCEPT the Silvercorp Offer (in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Silvercorp Offer is reasonable to OreCorp Shareholders),” said Mr Yates in the his statement.
The executive chairman provided three key reasons as to why the shareholders should reject the Perseus Offer, one being that it remains conditional on Tanzanian regulatory approval which has not yet been obtained.
Notably on the other hand, Tanzanian Fair Competition Commission (FCC) had already provided Silvercorp with the relevant merger approval for the Silvercorp Offer as announced by OreCorp on February 2, 2024.
OreCorp cautioned shareholders about the potential inadequacy of the timeframe for the FCC to complete its assessment of the Perseus Offer. This concern arises due to the deadline set by Perseus’s offer is March 19.
The directors had also told shareholders that it remains possible that a proposal that is superior to the Perseus Offer and the Silvercorp Offer could arise in the foreseeable future.
Another reason given to the shareholders is that the Perseus Offer Consideration is insufficient given the greater uncertainty associated with it and while offering certain value in the form of cash, denies them the opportunity to participate in the potential upside resulting from the successful development of Nyanzaga.
With the ongoing tussle between the mining firms, stakeholders keep advocating for a timely decision by the FCC, as it holds significance in navigating the regulatory landscape and determining the outcome of the ongoing saga, which hinges on regulatory approvals and shareholders’ decisions.
The Nyanzaga Gold Project (Nyanzaga or Project) is situated, approximately 60km southwest of the city of Mwanza.
If implemented as planned, Nyanzaga will be the first of its scale to be constructed.
The development of the Nyanzaga project is set to start production in the second half of 2025, and it is estimated to deliver 2.5 million ounces of gold over a 10.7-year lifespan.
