Carlisle questions validity of Nordgold’s takeover offer

Just a couple of days after announcing a strategic investment and JV agreement with AuRico, Carlisle Goldfields (CGJ.TSXV) has been offered $0.096 per share in an all-cash takeover from Nordgold.

Nordgold is a London-listed gold producer that operates nine mines across four countries and produced 924,000 ounces of gold in 2013.  It is 84.4% owned by Russian oligarch, Alexey Mordashov.

The offer would value Carlisle at at $24.1 million and represents a 140% premium to yesterday’s closing price (shares traded at $0.055 prior to the announcement today).  All cash and 140% premium…sounds great, right?

Unfortunately, its not that simple.

According to Carlisle, Nordgold is under a Mutual Confidentiality Agreement that has a standstill provision in it forbidding it from announcing an offer to acquire or announce an intention to offer to acquire or effect a take-over bid, of Carlisle without express written consent.

This morning, Nordgold issued a news release announcing its request for Carlisle’s consent to make a take-over bid.

A move that looks like an apparent violation of the terms of the Mutual Confidentiality Agreement.

Carlisle is reviewing the request and says it will respond in “due course”.

In the meantime, AuRico has paid Carlisle $5 million to earn an initial 25%-interest in the Lynn Lake gold camp in Manitoba.  AuRico has now become the operator of the project as well.  They can acquire an additional 26% by spending $20 million and delivering a feasibility study within 3-years.  This would be terminated under a Nordgold takeover.

Carlisle is now waiting for TSX approval to finalize a $5.65 million (70.6 million shares @ $0.08) strategic financing by AuRico.  Once completed, they will own 19.90% of Carlisle’s outstanding shares and will be eligible to nominate two directors.

Shares are currently trading at six cents, up one and half cents (valuing the company at $17 million).  Clearly, the market doesn’t believe the all-cash Nordgold offer will go through.

Although it is a significant premium and all-cash, management is likely reluctant to sell the company outright given that they have just secured development financing for the project which could see the value of the company materially increase.

We will have more on this transaction as it develops.

Posted By Travis McPherson

Read: Nordgold Requests Consent to Make 140% Premium Offer to Shareholders of Carlisle Goldfields Limited (Nordgold)

Also: Carlisle Responds to Nordgold Announcement and Provides Update on AuRico Joint Venture and Proposed Private Placement