Emerald Resources closing in on its Bullseye Mining takeover with a ‘Best and Final’ Offer

About Emerald Resources

Emerald Resources NL (Emerald, the Company, ASX: EMR) has its headquarters in Perth and has been listed on the ASX since July 1994. The Company is a developer and explorer of gold projects with the Company’s key project being the Okvau Gold Mine in Cambodia which has been in full production since September 2021. The Company’s other Cambodian project is the high-grade Memot Gold project. Emerald’s interest in Cambodia extends over a combined area of about 1239 square kilometres. Emerald also has a 78 percent controlling interest in Bullseye Mining Limited, an unlisted Australian public company with two Western Australian gold projects totalling more than 1200 square kilometres of highly prospective gold tenure including the North Laverton Gold Project in the Dingo Range Greenstone Belt. Directors and management own 20 percent and institutional investors own 47 percent of Emerald Resources.

Best and Final Offer

In a move that reflects confidence of the Emerald Resources Board in acquiring 100 percent of takeover target, Bullseye Mining, Emerald has declared its takeover bid ‘Best and Final’, with a 24 April 2024 closing date. This means that under ASIC’s ‘Truth-in-Takeovers’ policy, Emerald is prevented from improving or extending its Offer terms from this date. The basis of this policy is that given the economic significance of corporate takeovers, Australia’s corporate regulator seeks to provide certainty, reliability, and market efficiency of Bidders Statements. Market efficiency is enhanced by the reliability of the Bidder’s Statement and bidders having the assurance that conditions stated in their Take-over Bid Offer documents will be taken seriously by market participants.

The outcome for Bullseye shareholders in not accepting Emerald’s unconditional takeover offer prior to the 24 April closing date is that they will not receive the consideration under the current Takeover Offer. Instead, Bullseye shareholders will be left owning an illiquid minority stake in Bullseye, unless Emerald becomes entitled to proceed to compulsory acquisition of their shares. This can occur once Emerald has acquired 90 percent or more of Bullseye shares. Emerald currently owns 78.26 percent of Bullseye. Once the 90 percent threshold is reached, and Emerald uses the compulsory acquisition mechanism available to it, the remaining minority shareholders in Bullseye will have to wait for six to eight weeks after the compulsory acquisition process commences before they receive their Emerald shares. This is a powerful incentive for Bullseye shareholders who haven’t accepted the Emerald Takeover Offer to do so now because they will receive their Emerald shares within 10 business days of lodging their acceptance notice.

Looking Ahead

The $17.5 million in loans, interest, and management fees currently owed by Bullseye to Emerald Resources is pivotal to Emerald ultimately gaining 100 percent share ownership of Bullseye Mining. This is because if at the end of the Offer Period Emerald owns less than 90 percent of Bullseye shares, it intends to support Bullseye conducting a pro-rata entitlement issue of new Bullseye shares to ensure that Bullseye can repay Emerald’s outstanding loan. This capital raising will occur because Emerald controls 78 percent of the voting shares in Bullseye Mining. The raising would enable Emerald to take up any shortfall in the pro-rata rights issue and this is likely to deliver Emerald the 90 percent compulsory acquisition threshold necessary to take its ownership interest in Bullseye to 100 percent.

Emerald shareholders can follow progress in takeover acceptances being lodged by Bullseye shareholders by reading the ‘Application for Quotation of Securities’ notices lodged by Emerald Resources on the ASX. This notice shows the number of new Emerald Resources shares being issued to Bullseye shareholders as they exercise their right to exchange four Bullseye shares for one Emerald Resources share, as provided for the Emerald Resources Takeover Offer.