Provident Aurum, a special purpose vehicle owned by Provident Minerals, has announced its intention to make an off-market buyout bid offer for Sihayo Gold.
Australian Securities Exchange (ASX)-listed Sihayo is a minerals exploration and development company with gold projects in Indonesia. Provident Minerals has been a Sihayo shareholder since 2013.
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The proposal to acquire all shares of Sihayo, at $0.225 apiece, marks a 91.3% premium over the one-month volume-weighted average price of Sihayo shares.
Provident Aurum has declared the bid “best and final”, stating it will not raise the offer unless a competing bid emerges.
Sihayo’s non-associated directors are set to review the terms of the offer and the content of the bidder’s statement, and will make a recommendation to the shareholders.
Provident Aurum holds around 40.41% of the voting power in Sihayo.
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By GlobalDataIt directly owns 3,790,875,682 Sihayo shares, with additional interests through associates including Eastern Field Developments and Gavin Arnold Caudle, who is also a Sihayo director.
The offer from Provident Aurum is positioned as an opportunity for Sihayo shareholders to liquidate their holdings without incurring transaction costs associated with on-market sales.
This move comes after Provident Minerals’ consistent support for Sihayo, including participation in equity capital raisings and providing a recent unsecured working capital loan of $3.9m (S$5.31m).
Provident Aurum director Hari Gurung stated: “Despite multiple capital raisings over many years, Sihayo has still not been able to advance the Sihayo Gold Project (the Project) to development phase. Although Provident Aurum does not intend to develop the Project in the near term, if it is able to secure control of Sihayo, Provident Aurum intends to conduct a broad-based review of Sihayo’s overall business at a strategic, financial and operational level. The review will focus on identifying opportunities for cost reduction.”
Gurung further noted that the company looks to channel more resources to the project in the medium term to expedite its development.
He also outlined his plan in case of Sihayo snubbing the proposal.
Gurung stated: “In the event the offer is unsuccessful then Provident Aurum will undertake a review of its Sihayo investment and may explore the possibility of divesting its Sihayo Shares via a market selldown process or other means and may withdraw its involvement in Sihayo including discontinuation of financial support.”
