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REGIONAL ROUNDUP

Shandong trumps

bid for Cardinal

by Mark Andrews

ardinal Resources Ltd has drawn high acclaim for the well below our previous estimates of company value,” Hartleys
Cgold potential of its Namdini project in Ghana, with China’s resources analyst Mike Millikan said in a research note.
largest gold producer the most recent and strongest backer of “The current bid by Shandong Gold is more attractive [about
the prospect. $US30/oz] but is still below the median on a $US/oz metric
Gold Fields Ltd recognised the work Cardinal had put into for undeveloped gold assets, which is around $US40/oz. On
developing the 5.1 moz Namdini gold deposit a few years ago, a reserve basis, Namdini should have even higher value, with
taking a 11.2% stake in the company and being tipped to play a the median transaction value [excluding the Cardinal bids] of
big part in the project’s future. Then, earlier this year, Nordgold around $US80/reserve ounce, with the Nordgold bid about
S.E. entered the data room with intent. $US28/reserve ounce and the current Shandong Gold offer
However, Shandong Gold Mining, which is market capped at about $US41/reserve ounce.”
$US14.5 billion and produced 1.27 moz gold, generating $US9 Hartleys is one of Cardinal’s financial advisers alongside Maxit
billion in revenue and $US771 million EBITDA in 2019, has Capital LP, BMO Capital Markets and Canaccord Genuity Corp.
entered the fray with a full takeover offer, valuing Cardinal at Meanwhile, based on a total consideration of $US224 million
about $300 million. and a 7 moz gold resource, MinesOnline.com estimated
“Shandong came to us via one of our advisers who has history Shandong was offering $US32/oz, a discount of 36%, 24% and
with them,” Cardinal managing director Archie Koimtsidis told 3% to the one, three and five-year normalised average resource
GMJ. development transaction multiples of $US50/oz, $US42/oz and
“[We’re] happy that the project has been validated by a $US15 $US33/oz it had calculated.
billion producer who is looking to expand globally.” “If the Shandong offer is successful, the transaction will complete
Koimtsidis and other Cardinal board members are supportive at a discount to all multiples. MinesOnline.com believes the low-
of Shandong’s offer, which values Cardinal at 60c/share; a 31% grade reserve and resource, jurisdiction and significant capital
premium to the non-binding 45c/share ($227 million) proposal expenditure [estimated to be $US390 million or $565 million]
Nordgold put forward earlier this year. all contribute to the implied discount,” MinesOnline.com stated.
Barring a superior proposal and subject to all necessary Namdini is estimated to produce 1.1 mozpa gold over the first
approvals being satisfied, Shandong will acquire Cardinal, with three years, with life-of-mine average production 287,000 ozpa
a target and bidder’s statement to be released on July 21. over 15 years.
“Assessing some recent West African transactions, either for In late 2019, using a $US1,550/oz gold price, Cardinal released
part asset sale or total company acquisition, the recent Nordgold a feasibility study which guided a capital cost of $US390 million
preliminary bid appeared opportunistic [about $US20/oz] and (including $US42 million contingency) with AISC of $US895/oz
over 15 years, payback of nine months, pre-tax NPV of $US1.4
billion and pre-tax IRR of 57%.
Based on a $US1,150/oz gold price, total project payback
was estimated to take about three years, with pre-tax NPV of
$US406 million and pre-tax IRR of 26%.
In May, the Ghanaian EPA approved Cardinal’s EIS, essentially
paving the way for the development of Namdini.
Subject to financing, Cardinal indicated advancement of
FEED to completion to occur in Q3, the near completion of the
resettlement action plan in Q4 and production targeted for the
first half of 2023.
In addition to the proposed acquisition, Shandong took up
a placement of $12 million at 46c/share to allow Cardinal to
continue development of Namdini and working capital.
The 2019 Thayer Lindsley Award by the Prospectors and
Developers Association of Canada (PDAC) was won by Cardinal
for the Namdini discovery in Ghana’s Upper East region
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