Gold Road Resources hopes to grow its development pipeline with the Lake Rebecca gold project in Western Australia after offering $166 million to acquire Apollo Consolidated.
Apollo’s board unanimously recommended that its shareholders accept Ramelius Resources’ $128 million offer on Monday.
Gold Road, which is the largest shareholder in Apollo with a 19.9 per cent stake, said its offer was more compelling due to its ability “to realise certain and near-term value”.
The Gold Road offer represents $0.56 per Apollo share, which is the all-time highest price paid for an Apollo share.
Gold Road will fund the offer with $116 million in existing cash and draw down on its undrawn $250 million revolving corporate facility.
Apollo recommended its shareholders take no action at this stage.
“Apollo reiterates that shareholders should take no action in respect of the Gold Road offer until they have had the opportunity to fully consider both Apollo’s target’s statement and the bidder’s statement,” Apollo stated.
“As the Gold Road offer must remain open for at least one calendar month from its commencement, Apollo shareholders will have ample time to make a decision after they have received the target’s statement.”
Gold Road aims to diversify its growth pipeline with high-quality, low-risk developments such as the Lake Rebecca project.
The Lake Rebecca project has a mineral resource of 29.1 million tonnes at 1.2 grams per tonne of gold for 1.105 million ounces of gold.
Apollo also has a stake in the Louisa nickel-copper sulphide project in Western Australia in a farm-out arrangement with IGO.
“Given a successful outcome, Gold Road intends to undertake continued exploration and studies designed to advance the Lake Rebecca project,” Gold Road stated.
“Gold Road has the balance sheet and capabilities to grow resources at Lake Rebecca and develop new mining operations.”
Gold Road stated its offer follows a period of engagement with Apollo that included due diligence.
“These activities are exactly aligned with Gold Road’s core competencies, as demonstrated by the discovery of the Gruyere deposit, subsequent resource growth and definition and successful mine construction, commissioning and ramp-up,” Gold Road stated.
“Gold Road’s geological assessment has highlighted a number of as yet untested targets, and Gold Road’s exploration team is experienced at exploring beneath transported cover in the region.
“This strategic acquisition will complement and enhance Gold Road’s existing exploration pipeline by providing an advanced exploration project and diversifying the company’s resource base, aligning with the company’s objective of developing a second operating mine.”