MineWeb New Article " TakeOver Talks"Oromin shares surges on takeover talks
There is not much to go on, but it's safe to say there's a great deal of interest in Oromin's statement it is in tentative takeover talks.
Posted: Thursday , 08 Dec 2011
HALIFAX, NS -
After prodding from the TSX Market Surveillance department, Oromin Exploration (TSX: OLE) acknowledged it was in talks with a suitor that might lead to a takeover.
Oromin, which is focused on West African gold, was short on details, however. It did not name the potential buyer or describe any of the terms that may be under discussion.
"There can be no assurance that any transaction will occur, or as to the timing, structure or terms of any transaction," Oromin stated.
Investors took note sending Oromin's sharprice up 10 percent to C$1.08 on news of the talks. The surge built on pre-announcement gains of nearly 20 percent over the past two days.
What a buyer might want in Oromin is not hard to guess. It owns a 43.5 percent stake in the advanced-stage OJVG gold project in Eastern Senegal that holds over 3 million ounces gold in measured and indicated resources.
The who is another question. David Scott, Oromin investor relations manager, declined comment and Oromin stated in a press release that it was not going to make further announcements publicly about the acquisition talks "unless it concludes that they are warranted by the circumstances or are expressly required by law."
One thing can be almost certain. The buyer must be considering OJVG as a gold mine. In a 2010 feasibility study Oromin outlined a nine-year mine that would produce 187,000 ounces gold a year at $461 per ounce cash costs. Capital costs were estimated at $292 million.
Since that study, however, Oromin has added some 30 percent more resources to the project and optimized the mine plan to squeeze out more gold production. Presumably, then, OJVG could produce closer to 200,000 ounces a year and possibly for longer than nine years.
Oromin has some notable shareholders, including producers IAMGOLD (12 percent) and Teranga Gold (14 percent). The OJVG project is also 43.5-percent owned by Bendon International and Badr Investment and Finance has a carried 13-percent interest.