Petaquilla Minerals Ltd., the operator of the Molejon gold mine in Panama, jumped the most in more than two years after Canada’s Inmet Mining Corp. proposed a C$112 million ($114 million) takeover.
Petaquilla rose 66 percent to 58 Canadian cents at the close in Toronto, the most since Nov. 18, 2009. The shares closed higher than the per-share bid of 48 Canadian cents or 0.0109 of an Inmet share, indicating investors expect a better offer. Petaquilla declined 41 percent this year in Toronto through yesterday.
Buying Petaquilla will “eliminate a potential source of disruption” for Inmet’s Cobre Panama copper and gold project, Inmet’s Chief Executive Officer Jochen Tilk said today in a conference call. Toronto-based Inmet plans to spend $6.2 billion developing Cobre Panama into Panama’s largest mine. Petaquilla’s “cash balance is very low, they are not financially strong and we are concerned about that,” Tilk said.
Petaquilla is considering the offer, the Vancouver-based company said today in a statement. Inmet announced its proposed bid yesterday after regular trading ended in Toronto.
Inmet is proposing to pay about 4.7 times Petaquilla’s earnings before interest, tax, depreciation and amortization, according to data compiled by Bloomberg. The median multiple in three other takeovers of gold-mining companies valued at $100 million or more announced in the past year is 7.3, the data show.
Inmet’s bid “does not appear expensive and may be of strategic value, but the timing and use of funds will likely not sit well with investors, given the large existing capex commitment to Cobre Panama,” Stephen Bonnyman, an analyst at BMO Capital Markets in Toronto, said yesterday in a note.
Inmet’s financial adviser is Dundee Capital Markets Inc. Inmet’s shares rose 3.5 percent to C$45.77.