Western Australian gold explorer Focus Minerals (ASX: FML) has provided an update on the potential sale of the Coolgardie Gold Project to Horizon Minerals. Horizon has elected to exercise its matching right under the Exclusivity Deed and submitted a revised non-binding indicative proposal to Focus, with a total consideration of $52 million.
On 9 October 2019, Focus announced that the Company was in the process of evaluating a number of unsolicited offers from third parties.
The Board of Focus determined to pursue one of the unsolicited offers (Competing Proposal) on the basis that it was considered the most attractive and superior to the Horizon offer, which at the time had a total consideration of A$55 million comprising a combination of A$43 million in cash and A$12 million worth of newly issued fully paid ordinary shares in Horizon, payable to Focus over 3.5 years.
In response, Horizon has elected to exercise its matching right under the Exclusivity Deed and submitted a revised non-binding indicative proposal to Focus (Horizon Counter Proposal).
Highlights of the Horizon Counter Proposal are as follows: – A total consideration of A$52 million, all cash, payable to Focus over a 12-month period;
· Extension of the exclusivity period for a further 60 days;
· Removal of the fiduciary carve-outs, giving Horizon full exclusivity during the extended exclusivity period;
· A break fee of A$1.04 million payable to Horizon in the event that Focus enters into a written agreement with a third party other than Horizon to pursue a competing proposal during the extended exclusivity period;
· A break fee of A$1 million payable to Focus in the event the funding condition under the binding transaction documents is not met or waived by Horizon; and
· Horizon is required to replace the environmental bonds by the Department of Mines, Industry Regulation and Safety (DMIRS) if required.
After obtaining input from the Company’s advisers, Focus’ Board has determined the Horizon Counter Proposal to be no less favourable to Focus shareholders than the Competing Proposals. As a result, the terms of the Exclusivity Deed have been updated to reflect the terms proposed in the Horizon Counter Proposal.
Focus and Horizon will now continue to use their reasonable endeavours to agree formal binding documentation in respect of the Horizon Counter Proposal. The Proposed Transaction, as contemplated by the Horizon Counter Proposal, remains subject to the negotiation of and entry into formal binding written documentation and the obtaining of necessary approvals.
Accordingly, there is no assurance that the sale of the Coolgardie Gold Project, which includes the Three Mile Hill processing plant, will proceed.
Focus will continue to update the market as appropriate, consistent with its continuous disclosure obligations.