GOLD miner Centamin yesterday said it has offered to buy smaller explorer Ampella Mining, as it looks to diversify from its core Egyptian operations and snap up a new asset at the bottom of the cycle.
The FTSE 250-quoted firm wants to buy the Australia-listed explorer in an all share deal for A$41m (£22.7m), a 113 per cent premium to Ampella’s closing price on Monday. The bid is being recommended by the Ampella board and has the backing of Taurus, its largest shareholder.
Ampella has assets in Burkina Faso and Cote d’Ivoire, two countries which are just opening up to the potential of mining their lucrative gold resources.
“Ampella is very much the sort of thing that’s been on our radar,” Andy Davidson, head of business development at Centamin, told City A.M.
“We were looking to unlock value in exploration stage projects and take them into production.”
Centamin expects to spend $10m (£6.1m) per year for the next two years developing the assets.
The mining sector has been suffering under the weight of low metals prices for some time, after demand slowed from China. The junior end of the sector has been worst hit, making some of the companies ripe for picking by investors looking for distressed assets.
“Taking advantage of market malaise in gold to buy developed exploration portfolios with optionality on projects at a higher gold price seems like a very sensible deal albeit with longer duration for return,” said Kate Craig, analyst at Liberum Capital.