TIDMBGL
RNS Number : 8738F
Bullabulling Gold Limited
30 April 2014
30 April 2014 ASX Code: BAB, AIM Code: BGL
Dear Shareholder
THE DIRECTORS OF BULLABULLING GOLD UNANIMOUSLY RECOMMEND
THAT YOU REJECT THE NORTON OFFER BY TAKING NO ACTION
THE INADEQUATE AND OPPORTUNISTIC OFFER SUBSTANTIALLY
UNDERVALUES BULLABULLING GOLD SHARES
By now, you will be aware that Norton Gold Fields Limited
(Norton) announced an unsolicited takeover offer for your shares in
Bullabulling Gold Limited (Bullabulling Gold or the Company) on 17
April 2014.
Norton is offering 7 cents cash for every Bullabulling Gold
share you hold (the Offer).
You will shortly be receiving Norton's formal offer document,
called a Bidder's Statement, in the mail. This will be followed by
the Target's Statement, which will be your Directors' formal
response to the Offer.
For the reasons summarised on the following pages, your
Directors have concluded that the Offer is INADEQUATE and
OPPORTUNISTIC. Therefore your Directors unanimously recommend that
all Bullabulling Gold shareholders REJECT by TAKING NO ACTION in
relation to the Offer at this time. Your Directors DO NOT intend to
accept the Offer for shares that they own or control.
Your Directors believe that the Offer is fundamentally
opportunistic and timed to suit Norton's best interests without
reference to the true value of the Company or to the best interests
of Bullabulling Gold shareholders. The Offer does not reflect the
inherent value of Bullabulling Gold, including the 100% owned
Bullabulling Gold Project which hosts independently assessed JORC
compliant Mineral Resources of 3.75 million ounces(1) of gold.
Bullabulling Gold is currently preparing its Target's Statement
in response to the Offer and the Bidder's Statement. In
approximately three weeks you will receive the Target's Statement,
which will set out full details and reasons for the Directors'
recommendation and provide you with important information that you
need to consider in relation to the Offer. Until you receive the
Target's Statement your Directors recommend that you TAKE NO ACTION
IN RELATION TO YOUR BULLABULLING GOLD SHARES.
Your Company has received strong messages of support from a
number of Bullabulling Gold shareholders since the Offer was
announced, and to date holders of 41.8% of Bullabulling Gold's
shares have indicated that they DO NOT intend to accept the
Offer.
Bullabulling Gold has sought clarification in relation to
Norton's previous statements regarding initial support for the
Offer: Norton (through its advisers) has confirmed that 2.5% of the
6.6% of shares held by unnamed parties who indicated they intend to
accept the Offer are actually held by the wholly owned subsidiary
of Zijin Mining Group (Norton's parent company) referred to in
Norton's initial substantial holder notice. Based on responses from
Norton's advisers, it is also apparent that no other Bullabulling
Gold shareholder is under any binding obligation or commitment to
accept the Offer.
All shareholders can be assured that your Directors intend to do
whatever they can to ensure that, if control of Bullabulling Gold
is to pass to Norton or any third party, it will be on fair and
reasonable terms.
You will gain NO ADVANTAGE by accepting the Offer immediately on
receipt of the Bidder's Statement, even if you are otherwise
inclined to do so. Indeed, by doing so, you may be unable to sell
your Bullabulling Gold shares on market at a higher price if the
opportunity arises, and you may also miss out on the benefits of
any superior alternative proposal that might emerge from a third
party. We also note the Bullabulling Gold Share price is currently
trading at a premium to the Norton Offer price on both the ASX and
AIM.
As noted above, further details of the Directors' recommendation
will be provided in the Target's Statement. A copy will also be
available on the ASX website, www.asx.com.au and Bullabulling
Gold's website, www.bullabulling.com, as will news of any other
developments in relation to the Offer.
Your Directors look forward to your continuing support as we
respond to the Offer.
Yours sincerely
Peter Mansell
Chairman
Please direct enquiries or requests for further information
to:
Brett Lambert Darren Martin
Managing Director Executive Director
Bullabulling Gold Limited Gresham Advisory Partners
Level 2, 55 Carrington Street +61 8 9486 7077
Nedlands, WA, 6009, Australia dmartin@gresham.com.au
Tel: +61 8 9386 4086
Westhouse Securities Limited John Gardner / Rupert Dearden
(UK Broker & Nominated Adviser) MAGNUS Investor Relations. Corporate
Martin Davison / Dominic Palmer-Tomkinson Communication. (Australian Media)
/ Hugo Rubinstein Tel: +61 8 6160 4900
Tel: +44 20 7601 6100 bullabulling@magnus.net.au
[1] The information in this report that relates to the
Exploration Results, Mineral Resources or Ore Reserves was prepared
and first disclosed under the JORC Code 2004. It has not been
updated since to comply with the JORC Code 2012 on the basis that
the information has not materially changed since it was last
reported. All material assumptions and technical parameters
underpinning the estimates of mineral resources continue to apply
and have not materially changed. Mineral Resource estimate
comprising Indicated Resources of 72.4 million tonnes at 0.98 g/t
gold (2.28 million ounces) and Inferred Resources of 41.6 million
tonnes at 1.11 g/t gold (1.47 million ounces).
WHY YOUR DIRECTORS BELIEVE
THE OFFER IS INADEQUATE AND OPPORTUNISTIC
1. THE OFFER DOES NOT FAIRLY REFLECT THE VALUE OF THE BULLABULLING GOLD PROJECT.
2. ACCEPTING THE OPPORTUNISTIC OFFER WILL REMOVE YOUR EXPOSURE
TO ANY POTENTIAL INCREASE IN VALUE THAT THE BULLABULLING GOLD
PROJECT OFFERS.
3. YOUR DIRECTORS BELIEVE THIS IS LIKELY TO BE NORTON'S FIRST MOVE.
1. THE OFFER DOES NOT FAIRLY REFLECT THE VALUE OF THE BULLABULLING GOLD PROJECT.
In the opinion of your Directors, the Offer fails to recognise
the potential of the Bullabulling Gold Project.
The Offer implies a value of less than A$21 million for the
Bullabulling Gold Project.
Bullabulling Gold has successfully delineated independently
assessed significant JORC compliant Mineral Resources of 3.75
million ounces of gold. All resources are situated on granted
Mining Leases in close proximity to infrastructure, and are
amenable to bulk tonnage open pit mining and conventional CIL
processing. The Company is conducting a definitive feasibility
study into the development of a large scale, low cost mining
operation at Bullabulling, which is scheduled for completion in 1st
quarter 2015.
As shown below, the Bullabulling Gold Project contains one of
Australia's largest undeveloped gold Mineral Resources and is
located 60 km from Kalgoorlie, in one of Australia's premier
goldfields.
A table comparing the mineral resources of ASX Listed Australian
Gold Exploration/Development Companies can be seen in the full
version of this announcement available at www.bullabulling.com
The Definitive Feasibility Study, due out in 1st quarter 2015,
is expected to reveal further improvement in the Bullabulling Gold
Project's development plan and economics. The Offer fails to
recognise both the value that has already been demonstrated for the
project, and Bullabulling Gold's unrealised potential.
2. ACCEPTING THE OPPORTUNISTIC OFFER WILL REMOVE YOUR EXPOSURE
TO ANY POTENTIAL INCREASE IN VALUE THAT THE BULLABULLING GOLD
PROJECT OFFERS.
Your Directors believe the Offer is opportunistic and timed to
capture value that will otherwise flow to Bullabulling Gold
shareholders in the medium and long term.
In the past 12 months, Bullabulling Gold has completed a number
of developments to enhance the understanding and value of the
Bullabulling Gold Project, including:
-- Implemented targeted infill drilling programs increasing
mineral resources by 9.5 million tonnes to 114 million tonnes and
contained gold by 250,000 ounces to 3.75 million ounces, with a 2%
increase in average resource grade
-- Extended mine life by 2.5 years to 13 years
-- Increased forecast mine production by 15.6 million tonnes to
94.7 million tonnes and contained gold by 350,000 ounces to 2.56
million ounces
-- Re-optimised the project reducing C1 costs from US1,145/oz to
US$843/oz; all-in cash costs reduced to US$930/oz
-- Carried out metallurgical test-work that has identified
potential to further reduce production costs and increase gold
recovery
-- Capital Expenditure expectations reduced from initial
prefeasibility study estimates; further cost efficiencies expected
subject to completion of definitive feasibility study
It is in Norton's interest to buy as many Bullabulling Gold
shares as possible at the cheapest possible price before any
increase in the value of the Bullabulling Gold Project, which your
Directors consider is likely to occur as the Company moves closer
to completing the definitive feasibility study. If Norton acquires
your Bullabulling Gold Shares now, it will deny you the opportunity
to participate in any value accretion that may occur in the
future.
The Bullabulling Gold Directors believe the Company has a
well-developed strategy to create value for its shareholders. Your
Directors believe you should consider the following developments,
which are scheduled to occur over the next 9 to 12 months:
-- Completion of a metallurgical test-work program that is
demonstrating the potential for reduced operating costs and
increased gold recovery
-- Implementation of an infill drilling programme to enable the
completion of an initial reserve estimate for the Bullabulling Gold
Project, expected to be in the order of 2.5 million ounces
-- Completion of the definitive feasibility study on the Bullabulling Gold Project
-- Subject to the definitive feasibility study being positive,
commencement of financing arrangements for the Bullabulling Gold
Project
Although the completion of these developments is subject to risk
and cannot be guaranteed, your Directors believe that the potential
rewards substantially outweigh the potential risks. Further detail
regarding each of these developments will be provided in the
Target's Statement.
Your Directors believe that Bullabulling Gold is poised for
substantial growth and that operational enhancements should result
in further value accretion for Bullabulling Gold shareholders. Your
Directors consider that Norton has recognised this and has timed
its bid accordingly for its own benefit.
3. YOUR DIRECTORS BELIEVE THIS MAY BE NORTON'S FIRST MOVE.
Your Directors believe that Norton's unsolicited and inadequate
Offer may be just the first step in Norton's plan to take control
of Bullabulling Gold to secure the Bullabulling Gold Project.
Norton has indicated it recognises Bullabulling Gold as a
continuation of its strategy to pursue growth opportunities, in
particular as an adjunct to its current core operations in Western
Australia. However, this unrealised potential, including
development optimisation, will not be fully available to Norton
unless it acquires 100% control of Bullabulling Gold.
Given that the Offer is not subject to a minimum acceptance
condition, your Directors believe that if Norton fails to acquire
100% of Bullabulling Gold in its first attempt (i.e. under the
Offer), which is a potential outcome given holders of 41.8% of
Bullabulling Gold's shares have indicated that they do not intend
to accept the Offer at the current price, it is possible that
Norton may return in the future with a separate, follow-on offer in
order to acquire 100%. If your Directors' views regarding the
potential enhancements to the value and economics of the
Bullabulling Gold Project are realised, it is possible that any
follow-on offer by Norton would be at a higher price than the
current Offer.
Bullabulling Gold shareholders should note that your Directors
are not aware of any specific intention on the part of Norton to
make any follow-on offer should it not acquire 100% of Bullabulling
Gold (or sufficient interests to allow it to proceed to compulsory
acquisition) under the Offer, and there can be no guarantee as to
what action Norton might take in these circumstances.
However if you do accept the current Offer and it becomes
unconditional, you will be unable to benefit from any future offers
that Norton may make.
Your Directors urge you not to sell to Norton at a price that
does not, in the opinion of your Directors, reflect the medium and
long term potential upside that Bullabulling Gold offers you.
--------------------------------------------
A TARGET'S STATEMENT WILL BE ISSUED BY YOUR DIRECTORS IN THE
COMING WEEKS.
THE TARGET'S STATEMENT WILL CONTAIN ALL OF THE INFORMATION YOU
NEED TO CONSIDER THE OFFER.
PENDING RECEIPT OF THE TARGET'S STATEMENT, YOUR DIRECTORS
UNANIMOUSLY RECOMMEND THAT YOU TAKE NO ACTION IN RELATION TO YOUR
BULLABULLING GOLD SHARES.
Forward looking statements & competent persons'
statement
Competent Person Statement
The information in this report that relates to the Exploration
Results, Mineral Resources or Ore Reserves is based upon
information compiled by Mr Trevor Pilcher, who is a full time
employee of the Company and is a member of The Australasian
Institute of Mining and Metallurgy. Mr Pilcher has sufficient
experience relevant to the style of mineralisation and type of
deposit under consideration and the activity in which he is
undertaking to qualify as a Competent Person under 2012 Edition of
the Australasian Code for Reporting Exploration Results, Mineral
Resources and Ore Reserves (JORC Code). Mr Pilcher consents to the
inclusion in this report of the matters based on his information in
the form and context in which it appears.
The information in this report that relates to the Exploration
Results, Mineral Resources or Ore Reserves was prepared and first
disclosed under the JORC Code 2004. It has not been updated since
to comply with the JORC Code 2012 on the basis that the information
has not materially changed since it was last reported. All material
assumptions and technical parameters underpinning the estimates of
mineral resources continue to apply and have not materially
changed.
Material assumptions supporting the Bullabulling mine production
forecast in this report were released on 7 March 2014.
This release contains forward--looking statements. These
statements are not based on historical facts, but rather reflect
the current expectations of Bullabulling Gold and its Directors
held only as at the date of this announcement (or the date on which
the relevant statement was actually made, as the case may be)
concerning future results and events (but is not a prediction of
future outcomes) and generally may be identified by the use of
forward-looking words or phrases such as "believe", "aim",
"expect", "anticipated", "intending", "foreseeing", "likely",
"should", "planned", "may", "estimated", "potential" or other
similar words and phrases. Statements that describe Bullabulling
Gold's objectives, plans, goals or expectations may also be
forward-looking statements.
Although Bullabulling Gold believes that the views reflected in
any forward-looking statements in this announcement have been made
on a reasonable basis, the forward-looking information is not a
representation or warranty (express or implied) as to future
matters and no assurance can be given that such views will prove to
be correct. The actual results could differ materially from a
conclusion, forecast or projection in the forward--looking
information. Any forward-looking information: (i) is based on
certain material factors or assumptions were applied in drawing a
conclusion or making a forecast or projection as reflected in the
forward--looking information; (ii) may involve significant elements
of subjective judgment and assumptions as to future events which
may or may not be correct; and (iii) involve known and unknown
risks and are subject to significant uncertainties and
contingencies, many of which are outside the control of
Bullabulling Gold.
Subject to any continuing obligations under law, the ASX Listing
Rules or the AIM Rules for Companies, Bullabulling Gold does not
give any undertaking to update or revise any forward-looking
statements after the date of this announcement to reflect any
change in expectations in relation to those statements or any
change in events, conditions or circumstances on which any such
statement is based.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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