Bill Beament should be offering as much as 40¢ per share to Echo Resources’ shareholders. The offer is not unexpected, but market analysts believe that Beament’s Northern Star Resources (ASX:NST) undervalues Echo Resources (ASX:EAR). Why should NST raise their offer price of 33¢ per share to EAR’s shareholders? One thing is for sure — Beament’s NST needs EAR’s assets.
Echo’s project has a mine life of over 10 years
Northern Star Resources has been eyeing EAR’s potential, taking their stake of approximately 22% of the company. Beament’s opportunistic offer to acquire the rest of EAR’s holdings gives NST the golden opportunity to takeover EAR, which owns key infrastructure necessary to operate a stand-alone gold production operation.
Market analysts believe that Echo Resources’ project has a mine life of over 10 years. Economic return to shareholders increases with the inclusion of EAR’s resources at Corboys and Mt. Joel into the project plan.
Bronzewing will enhance gold production once operational
Echo’s Bronzewing processing plant is a highly strategic asset located in a Tier-1 jurisdiction with numerous stranded deposits across the region. Echo has the potential to optimise the Bronzewing plant, enhancing the gold production rate and creating a more profitable and sustainable business, as per the BFS (bankable feasibility study).
Once Bronzewing is operational, the processing hub will act as a kingpin for the entire region’s gold deposits. Bill Beament offering to acquire the rest of Echo’s holdings is an opportune moment for Northern Star Resources because the Perth-based gold miner has begun to stockpile gold ore as a result of throughput restrictions at their Jundee plant.
Beament’s low-ball offer to EAR shareholders
Echo Resources Shareholders think they are being short-changed. EAR is worth significantly more than 33¢ per share considering its exploration potential and strategic assets like the Bronzewing processing plant.
NST struck gold with EAR’s resources. With the potential of Echo Resources, Bill Beament should increase its crumbs takeover offer for the best interest of EAR’s shareholders and the mum and dad investors who need to keep their shares and trade only at a higher price.