Cardinal Resources attracts third bidder in takeover war

Namdini gold project in Ghana. (Image courtesy of Cardinal Resources.)

A long-running battle between Nordgold (LON: NORD) and China’s Shandong Gold over Cardinal Resources (ASX, TSX: CDV) has taken an unexpected turn after a Ghanaian firm formally presented on Tuesday an all-cash, unsolicited offer for the Australian miner.

Engineers & Planners Company is topping previous bids for Cardinal with a conditional, off-market takeover offer of A$1.5 per share that would give it control of the target company’s gold asset in Ghana.

The acquisition of Cardinal’s Namdini project would enable Engineers & Planners Company to create thousands of jobs and maximize Ghanaian revenues, the bidder said.

Engineers & Planners Company is topping previous bids for Cardinal with a conditional, off-market takeover offer of A$1.5 per share

Namdini is expected to churn out 4.2 million ounces of gold over a 15-year mine life, with an estimated 1.1 million ounces to be produced over the first three years of the operation. The project’s development cost is currently pegged between $275 million and $426 million, depending on the project final’s scale.

Eight-month battle

Nordgold first approached Cardinal in March with an unsolicited takeover offer that was quickly topped by Shandong Gold.

The Moscow-based company became at the time Cardinal’s largest shareholder, with a 19.9% voting power. It sits now at just over 28%. Shandong holds about 11.9%.

Seven months of competing offers went by until Shandong came up in September with what seemed a winning offer. The A$1-per-share bid valued the company at A$538 million (about $381 million).

Nordgold matched in October the Chinese miner’s bid, adding it was its “final and best offer”. It also took Cardinal to Australia’s Takeovers Panel accusing it of misleading shareholders.

Cardinal’s board, which has openly shown its preference for the Chinese bidder, once again told shareholders that accepting Shandong’s offer was the “only realistic way in which the auction will be re-enlivened.”

Nordgold, controlled by Russian oligarch and steel billionaire Alexey Mordashov, told the Takeovers Panel  that Cardinal’s statement was “materially misleading” as it suggested that a higher offer from Shandong could be unlocked.

Cardinal was then forced to clarify that while Shandong may have an option to increase its final offer, it was not a given.

Surprise factor

Engineers & Planners’ bid effectively broke the stalemate between Shandong and Nordgold.

The first one to react was the Chinese miner, which increased its offer for Cardinal to A$1.05 a share, matching the Ghanaian suitor.

Nordgold opted for disregarding the third bidder. “In the present circumstances, Nordgold considers that a bid which is not an unconditional fully funded cash bid is unlikely to constitute a competing offer for the purposes of the best and final statements,” it said.

Engineers & Planners’ offer is conditional upon 50.1% minimum acceptance by Cardinal shareholders, as well as regulatory approvals. These approvals include the Foreign Investment Review Board in Australia and relevant authorities in Ghana.

Cardinal has advised its shareholders to take no action at this time while the board considers the proposal. 

Shares in the Australian miner closed 5.5% higher in Sydney on Tuesday at A$1.06 apiece, leaving the company with a market capitalization of A$572.83 million ($420 million).

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