Australia

Perseus Mining has potential for valuation upside from Exore acquisition: Canaccord Genuity

Perseus Mining Limited (ASX:PRU) (TSE:PRU) (OTCMKTS:PMNXF) is acquiring Exore Resources Ltd (ASX:ERX) (OTCMKTS:NLIOF) which will result in Perseus gaining a dominant gold landholding in Cote dIvoire

The parties have entered a Scheme Implementation Deed which will see Perseus acquire 100% of Exore in a deal that values the target at just under $60 million.

Canaccord Genuity has reiterated its buy rating for Perseus with a target price of $1.85 per share (current price: $1.14).

The following is an extract from Canaccords research report:

Bolt-on could give Sissingue extra life


Acquisition of Exore Resources (ERX:ASX | Not rated): PRU has announced that it intends to acquire 100% of the issued capital of ERX via a scheme of arrangement. ERX's key asset is an 80% interest in the Bagoe and Liberty gold projects in Cote D'Ivoire (moving to 100% through exercise of preemptive right at a cost of US$4.5m, funded by ERX). ERX is a constituent of our Exploration Watch List.

Under the transaction, PRU will issue 1 share for every 12.79 ERX shares on issue as consideration, representing a 78% premium to ERX's 20-day VWAP, with a total transaction value of A$64m (fully diluted). The transaction is subject to customary conditions (shareholder/court approval etc) with the current timetable suggesting completion in mid Sep'20.

Bagoe Gold Project: The Bagoe gold project is the most advanced of ERX's projects and is located ~75-100km south of PRU's Sissingue operation. Bagoe hosts total Resources of 530koz at 2.5 g/t (1 g/t cut off) between the Antoinette (78%) and Veronique deposits. Gold mineralisation is shallow (predominantly <150m), with metallurgy featuring free-milling and refractory sulphides with ~45% of project Resources (240koz at 2.9 g/t) considered free-milling. The wider tenement package (including Liberty and Tengrela projects) covers a total of ~2,000km2, with numerous additional exploration targets.

What it means for Perseus: In our view, the most obvious synergy presented by the acquisition is the opportunity to exploit high-grade, near-surface free-milling Resources at ARead More – Source