UPDATE 1.45pm: Resolute Gold has secured a 20 per cent stake in West African gold play Noble Mineral Resources and is making an $85 million financing proposal to rival that of China's Zhongrun Group.
In a surprise move, Resolute announced this morning it had executed share sale agreements with "certain Noble shareholders" to acquire 19.99 per cent of the company's issued capital and would make an $85 million financing offer to the company to help with the ramp-up of its flagship Bibiani gold project in Ghana.
However Resolute made the purchase and financing offer conditional upon Noble rejecting a similar offer from Zhongrun.
Last month, Zhongrun offered to invest $84.7 million in Noble Mineral Group to secure 41.5 per cent of the company. Under the agreement, the company would later boost its holding in Noble to 51.6 per cent through the exercise of options and the investment of a further $55.4 million.
Resolute, which has operations in Mali and Tanzania, has argued its financing offer is superior to that of Zhongrun's and urged Noble shareholders to vote down the Zhongrun placement at a general meeting next Wednesday.
"Resolute's financing offer provides significant advantages to Noble shareholders, including speed and certainty of funding, the opportunity for existing Noble shareholders to participate in the recapitalisation of Noble, and the opportunity to benefit from Resolute's significant experience operating gold mines in Africa," Resolute said in a statement.
Resolute's offer consists of a $78.7 million convertible note issue, a $6.3 million placement of convertible notes to Resolute and a $20 million short term financing agreement for Noble.
If accepted, Resolute would end up with a 23.1 per cent stake in the company.
Resolute chief executive Peter Sullivan said the choice was now in the hands of the Noble shareholders.
"We believe Resolute's financing offer is clearly superior to the existing alternative in front of Noble shareholders," he said.
"The Zhongrun transaction essentially hands control of the company over to Zhongrun, leaving existing shareholders as a highly diluted minority.
"In contrast, Resolute is proposing to provide Noble shareholders with the opportunity to not only participate in the capital raising and maintain their shareholdings at current levels, but also benefit from our extensive experience operating gold mines in Africa."
Noble Mineral Resources said in a statement its board and advisers were assessing Resolute's proposal and would provide further information to shareholders in due course.
Noble's Bibiani project hosts a known resource of 41.1 million tonnes at a grade of 1.71 grams per tonne for 2.26 million ounces.
Noble shares closed up 1.5 cents, or 12 per cent, at 14 cents at 8.35am while Resolute shares were off eight cents, or 4.23 per cent, to $1.81.