Lihir to merge with Equigold NL
By FRANK ASAELI
A GLOBAL pure gold company with a diversified portfolio of high quality operations will be created once Lihir Gold Ltd (LGL) and West African gold miner Equigold NL (EQI) have merged their businesses.
The merger will also create a strong financial base and an exceptional growth profile.
Both companies, in a joint Australian Stock Exchange (ASX) announcement last March 20, said that market capitalisation of the combined group will be approximately A$9 billion (K22 billion).
This was based on the closing share price of LGL shares as at March 19, thus securing its position in the top 30 companies in Australia and among the world’s largest gold producers.
The combined group will have world class assets in Australia, West Africa and Papua New Guinea with 25 million ounces in gold reserves.
Together, the group will produce in excess of 1.2 million ounces of gold a year from next year at cash cost in the lowest quartile of global producers.
The merger will be achieved through a “scheme of agreement”, with Equigold shareholders to receive 33 LGL shares for every 25 Equigold shares they own.
The offer values Equigold shares at approximately A$5.33 (K12.77) or a 24% premium the day prior to the announcement of the scheme and based on the closing prices of LGL shares last Wednesday.
Directors of Equigold and Lihir have generally backed the proposed takeover, which they said will boost growth prospects for both companies.
Equigold chairman Nick Girogetta said the takeover was an excellent deal for the company’s shareholders.
“Furthermore, it gives us the financial muscle required to realise the full potential of our exploration tenements in Ivory Coast,” he said.
The Bonikro project in Ivory Coast, in which Equigold has an 85% stake, is due to start up in July, with annual output expected to reach around 150,000 ounces next year.
Total cash costs for the merged group are expected to remain competitive at less than A$350 (K839) an ounce for Lihir’s projects and about A$330 (K791) an ounce from 2009 for Equigold, compared with gold prices around A$1,000 (K2,396) an ounce this week.
Each company has agreed to pay a break fee of A$11.3 million (K27.1 million) to the other if the deal falls through.
LGL is being advised by Caliburn Partnership, while Equigold is being advised by Euroz Securities.
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