Evolution could put paid to Phoenix
The dam appears ready to burst for Kalgoorlie-based Phoenix Gold, which is plugging holes to stave off a takeover bid by Evolution Mining.
The Jake Klein-led Evolution, Australia’s second-biggest gold producer, yesterday upped its stake in Phoenix to 32.31 per cent.
Evolution controlled 19.8 per cent of Phoenix shares when it launched its takeover bid on August 20.
Fund manager Geologic last week agreed to fold its 9.03 per cent stake into the cash and scrip offer.
China’s Zijin Mining Group, which controls Norton Gold Fields, is also believed to be on the verge of accepting Evolution’s offer for its 8.9 per cent holding.
Evolution’s offer of 0.06 of its shares and 6¢ for every Phoenix unit expires on November 26.
The offer initially valued Phoenix at $56.4 million, or 12¢ a share.
But Evolution’s shares have since jumped from $1.04 to $1.46 yesterday, valuing the offer at $69 million, or 14.7¢.
It is almost within reach of independent expert BDO Corporate Finance’s fair value range of 15.6¢ to 24.4¢.
Evolution wants Phoenix’s 4Moz gold inventory to feed its Mungari mill.
Even if Evolution’s offer is successful, Norton will retain the right to mine Phoenix’s flagship Castle Hill project, north-west of Kalgoorlie-Boulder.
Meanwhile, Excelsior Gold ma- naging director David Hamlyn says the fledgling producer will funnel profits from the Kalgoorlie North project into exploration, claiming the company has only scratched the surface.
Excelsior plans to mobilise contractors on site next month and pour the first gold from the 1.3Moz project early in the new year. It has done a deal with Norton to process ore at the Paddington mill.
“We’re blessed to be in a prolific gold region like Kalgoorlie,” Mr Hamlyn said.
“When we first took this project on stockbrokers said Kalgoorlie has been done to death, there’s nothing left.
“The reality is it’s a good, safe environment to develop a gold project and there is plenty left out there.”
Kalgoorlie North has an initial seven-year mine life and should deliver 273,000 ounces.
Mr Hamlyn said the initial mining plan covered only five of the 22 resource areas at Kalgoorlie North. “The project area has been overlooked for 20 years,” he said.