News blog

Bullabulling Gold

• BY: Andrew Hore |
• POSTED: 14/05/2014 |

Bullabulling Gold has published its reaction to the bid from ASX-listed Norton Gold Fields Ltd and the gold miner’s board says that it rejects the opportunistic bid.

Norton has launched a A$0.07 (3.9p) a share offer for Bullabulling, which management says is inadequate and does not reflect the value of the Bullabulling gold project.

The Bullabulling gold project has independently assessed mineral resources of 3.75m ounces of gold and the planned production is 175,000 ounces a year. Estimated cash costs are $930 per ounce of gold. However, the mine requires substantial investment to get to production. Additional cash will be needed to complete the definitive feasibility study (DFS) by early 2015.

BDO Corporate Finance in Australia has been employed as an independent expert and it has valued Bullabulling at between A$0.111 and A$0.161 a share. A discounted cash flow valuation is not appropriate until the DFS is completed.

Apparently, the owners of 41.8% of Bullabulling;s shares say that they do not intend to accept the offer.

Bullabulling believes that the bid is the first step in Norton’s plan to take control of the company. Bullabulling’s board suggests that Norton may come back with a higher offer but there is no certainty that this will happen. The offer is not subject to a minimum acceptance condition which suggests that Norton would be comfortable as a minority shareholder. It may then make a further bid in the future.

Norton already owns a project at Paddington near Kalgoorlie in Western Australia and there could be operational savings from owning both projects. 

Norton has complained to the Australian Takeover Panel about previous information sent to shareholders, some of which is repeated in the latest document.

At 4p a share, up from 3p prior to the bid, Bullabulling is valued at £13.7m.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFMay2014_56.pdf