Northern Star eclipses Echo
ECHO Resources has been taken over by its former largest shareholder, Northern Star (NST).
Under the bidding implementation agreement, NST acquired all of the issued and outstanding ordinary shares in Echo that it did not already own under the terms of an off-market takeover bid.
The move values Echo at $242.6m, with Echo shareholders receiving 33c for every share held, representing almost a 40pc premium to the company’s August trading price of 23c.
Echo Resources chief executive Victor Rajasooriar said that the board was pleased to accept the offer in the absence of a superior proposal, and that the offer reflected the strategic nature of Echo’s Yandal gold project.
NST is continuing its heavy growth strategy investment after posting underlying NPAT of $179.2m for the June year (FY19), down from its $211.5m profit a year earlier but incorporating its $50m acquisition of the Pogo gold mine in Alaska, USA.
NST is a Perth-based international miner, gold producer and explorer in the Ashburton, Pilbara, Murchison and Kimberley regions of WA, whole Echo is a Perth-based company focused on exploration tenements in the Yandal gold project, which encompasses 1600sqkm in WA’s Yandal greenstone belt about 400km north of Kalgoorlie.
In late June, Echo released an updated resource for the project with global resources for Yandal totalling 28.6mt at 2g/t gold for 1.8moz.
A bankable feasibility study was unveiled in April revealing pre-production capital expenditure of $42m to build an initial four-year operation producing 95,000oz gold a year for pre-tax project free cash flow of $225m – a figure expected to be much higher now with soaring gold prices.
The project also hosts the historic Bronzewing mine and associated infrastructure, including an 1.8mt per annum processing plant.
Northern Star aims to consolidate the Yandal gold project and secure the plant.
Its Jundee mine is also located at Yandal, and combined with Pogo and its Kalgoorlie operations, the company expects to produce up to 900,000oz in 2020.
Echo shareholders have been urged to accept the unconditional offer promptly.