Nordgold - a London-based, Russian-controlled gold mining company that operates gold in Russia, Canada and Guiana of France - is offering $0.66/share in cash to shareholders of Cardinal Resources - a gold mining company in Ghana.
This incentive is 10% higher than the bid price of 0.60 USD/share of China's Shandong gold mining company. Shandong is the second largest gold mining company in China in terms of output.
Nordgold is under the control of Alexey Mordashov and his two sons Kirill and Nikita. They own 99.94% of the company. Mordashov is said to be the fourth richest Russian billionaire, with assets worth more than 19 billion USD. He now owns the steel and coal giant Severstal, and has other significant benefits including a large stake in TUI - a British travel and aerospace corporation.
Nordgold has shown a previous interest in Cardinal Resources. In March, they bought 99.44 million shares and currently hold 18.71% of the company. Nordgold has made an initial proposal to take over Cardinal Resources, but there is nothing more - until now.
The new offer is not subject to conditions, but with just 170 million shares of Cardinal Resources, Nordgold will hold 51% of the company's shares.
Meanwhile, Son Dong Company's proposal is conditional when receiving approval according to regulations here and in China.
Smallcaps reported that Nordgold revealed on July 15 that the company submitted an application for approval from the Australian Foreign Investment Commission in April and was granted a license on July 9.
In June, Cardinal Resources' board approved Son Dong's proposal to pay in full cash, but on July 15, it advised shareholders to " stop taking hasty action" after Russian company Nordgold offered a bid.
Cardinal Resources is the owner of two gold mines in Myanmar, Bolgatanga and Subranum, along with about 734 km2 of licensed mining areas.
These projects have mineral reserves of 138.6 million tons at 1.13 grams per ton of gold, equivalent to a total of 5.1 million ounces. A feasibility study shows that the mining cost is around 390 million USD. World gold prices are currently trading around $1,800/ounce.
The life of the gold mine is expected to be 15 years, with an average of 287,000 ounces exploited each year.
Nordgold was established to carry out gold projects owned by Severstal. The company operates 10 mines across four countries: Russia, Kazakhstan, Burkina Faso and Guinea, but the cardinal Resources portfolio will be the largest.
Key projects - all in the exploration phase - are Uryckh near Irkutsk, Siberia, with published reserves of 1.76 million ounces of gold; Montagne d'Or in Guiana, France, where Nordgold spent $30 million to earn a 55% stake and has proven reserves of could be 2.75 million ounces of gold; and Pistol Bay in Canada's Nunavat territory near the coast of the Gulf of Hudson, where the published reserves are 1.58 million ounces of gold.
