Emerald Resources (ASX:EMR) share price lifts on $117 million acquisition

Here’s the news the market’s been waiting for…

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The Emerald Resources NL (ASX: EMR) share price is climbing higher today after breaking a 6-session long trading halt with news of a major acquisition.

The gold miner has offered to take over its unlisted Australian peer, Bullseye Mining Limited, for an all-scrip offer valuing it at $117 million. The offer has been accepted by the Bullseye board.

At the time of writing, the Emerald Resources share price is $1.08. That’s 1.41% higher than it was before it was frozen last Monday.

Let’s take a closer look at today’s exciting news from the gold explorer, developer, and producer.

Emerald Resources puts forward takeover bid

The Emerald Resources share price is sparkling in green on Tuesday after the company announced it’s planning on acquiring 1,200 square kilometres of gold prospect licences through a takeover.

Bullseye Mining holds 3 projects in Western Australia’s goldfields. One of these – the North Laverton Gold Project – covers the entire Dingo Range Greenstone Belt.

More than 100 million ounces of gold has been produced or discovered in the areas surrounding the project.

Bullseye also owns the Southern Cross Gold Project and the Aurora Gold Project.

The ASX-listed company has offered Bullseye shareholders 1 Emerald Resources share for every 3.43 Bullseye shares held. That will give Bullseye shareholders around 18% of the resulting entity on a non-diluted basis.

The $117 million valuation — around 30 cents per Bullseye share – is based on Emerald Resources’ 30-day volume-weighted average price leading up to 26 November 2021.

Emerald Resources purchased a 19.45% stake in Bullseye prior to its takeover bid on the same terms as the offer.

The takeover is still subject to 90% of Bullseye shareholders voting in favour. However, the company’s directors have each indicated they intend to vote in favour of the acquisition in respect to their own holdings.

What did management say?

Emerald Resources’ chair Simon Lee commented on the proposed acquisition:

The combination [of the companies] will create a gold exploration and production company with a diversified asset base, strong balance sheet, solid and recurring revenue, with significant cost savings and operational synergies.

The Bullseye mining team have done a highly commendable job in consolidating the entire Dingo Range greenstone belt and identifying and developing resources. We see the strong probability of expanding these resources through the inclusion of results from the completed 35,000 metres of drilling and infill and extensional drilling campaign planned for 2022.

Bullseye chair Peter J Burns also commented, saying the bid offers an attractive value proposition:

This transaction brings many benefits to Bullseye shareholders, including significantly de-risking project financing and project development/implementation risks…

[The takeover will provide] exposure to Emerald’s strong cash producing Okvau Gold mine and also provides Bullseye shareholders with liquidity to their investment via the ASX.

Emerald Resources share price snapshot

This year is proving to be a good one for the Emerald Resources share price.

The company’s stock has gained around 27% year to date. It is also 9% higher than it was this time last month.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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