FRIENDLY ACQUISITION BY IAMGOLD
?? Trelawney has agreed to be acquired by IAMGOLD
for $3.30 a share or $608 million in cash
($505 million net of Trelawney's cash).
?? The offer is based on a 36.6% premium to
Trelawney's 20-day VWAP.
?? Shares held by IAMGOLD and Trelawney's
Management and Board represent 13.3% of the
current shares outstanding.
?? The offer requires 66 2/3% approval by Trelawney
shareholders and is expected to close by the end of
?? The offer is subject to a $21 million break-fee,
representing approximately 4% of the "net-of-cash"
?? Net of cash, this deal values Trelawney at $73/oz Au
of total resource.
?? Given the deposit size, exploration potential, land
position and access to infrastructure, we view
IAMGOLD's offer for Trelawney as too low and
opportunistic given that the price of junior gold
companies is at an extremely low level on an EV/oz
basis. Our "gold comps" currently trade at an EV/oz
of $40. Obviously, this deal works well for
We are increasing our target price on Trelawney
Mining to $4.25 and maintain our SPECULATIVE
BUY recommendation and ABOVE AVERAGE risk
rating. Our valuation is based on a "fair" offer for
Trelawney of $100/oz (i.e. $687 million) plus
Trelawney's cash of $103 million, for a total "fair"
deal that ought to be worth $790 million.
We are aware that Trelawney has numerous
confidentiality agreements that now fall away with
IAMGOLD's offer. We believe there remains a strong
possibility of a competing offer for Trelawney.