Crescent Gold (ASX: CRE, TSX: CRA, FFT: CRE5) has received early notices for the conversion of $4.5 million of Crescent convertible notes into Crescent shares and options at about $0.0467 per share.
These will convert into 96.3 million shares and 48.1 million options each expiring on 31 December 2012, with an exercise price of $0.05.
The notices were from Crescent convertible note holders who subscribed to the company's $8.84 million capital raising on May 30 to help further develop its Laverton gold operations.
On June 20 Focus Minerals (ASX: FML) made a conditional off-market takeover bid for all of the issued shares in Crescent Gold at a 30.5% premium to Crescent’s last close price of $0.05 per share.
Focus is offering one share for every 1.18 Crescent shares in the offer, which is conditional on a minimum acceptance of 90%. Prior to launching the offer Focus held a 19.99% stake in Crescent Gold.
Mark Troy, Crescent Gold's managing director, said the early conversion is "a positive step towards the successful implementation of the Focus offer and a strong endorsement of the transaction rationale and of any future prospects for the combined entity."
The merger will make Focus one of Australia’s Top five gold producers with 230,000 ounces of production target in 2012 from multiple open pit and underground operations. The combined group will have a JORC Resource inventory of 4.3 million ounces of gold.
Focus brings the immediate funds to accelerate exploration at Laverton, with strong group revenues providing a basis to fund further exploration to expand group resources.
The increase in management depth and operational experience will maximise the value of Crescent’s assets. Focus recommissioned the Three Mile Hill processing plant 18 months ago and opened two new mining operations in the last three months.
As a result of the deal, there will be significant rerating potential with the merged proforma EV/Resource multiple at a 39% discount to the current peer average of A$107/oz. The implied EV/Resource ratio of the combined entity is A$66/oz.
The transaction will create significant synergies in combining Focus’ established Coolgardie operations with Crescent’s significant open pit operations at the Laverton Gold Project.
The combined group will have the financial strength to unlock Crescent’s extensive exploration upside across 1,400 square kilometres of tenements, and anticipates having very strong operating cash flows.
