Corrs advising Equigold on its proposed $9 billion merger with Lihir Gold

02 April 2008

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Corrs is advising Equigold on its proposed $9 billion merger with Lihir Gold (LGL). If approved by Equigold shareholders, the merger of the two ASX listed companies will result in a company with market capitalisation of approximately A$9 billion, securing its position in the top 30 companies in Australia and creating the world's ninth largest gold producer.

The combined group would have a diversified portfolio of high quality assets and operations in Australia, West Africa and Papua New Guinea, producing in excess of 1.2 million ounces of gold a year from 2009 at a cash cost in the lowest quartile of global producers, and will possess a strong financial base and strong growth prospects.

The proposed merger is to be achieved through a Scheme of Arrangement under which Equigold’s shareholders will receive 33 LGL shares for every 25 Equigold shares they own and Lihir Gold will acquire 100% of the shares in Equigold. The directors of both companies are unanimously supporting the merger, in the absence of a superior proposal and subject to the Independent Expert concluding that the merger is in the best interests of Equigold’s shareholders.

The proposed merger is subject to a number of conditions including the approval of Equigold shareholders, regulators (including FIRB, POMSoX, NASDAQ and TSX) and the Federal Court. The parties are aiming to complete the transaction by early June 2008.

Corrs has undertaken a broad range of work on the transaction, including the Merger Implementation Agreement (MIA) negotiations, MIA due diligence issues, due diligence and taxation matters. The work program continues as the Scheme Booklet is being finalised and preparation for the first court hearing date commences.

The transaction highlights the strength of the firm’s Energy & Resources Industry Division, which is currently advising on three energy deals listed by the Australian Financial Review (25 March 2008, pg 22) as being in the Top 10 Australian M&A deals announced in 2008. Corrs is also advising Anzon Energy Limited (AEL) on the proposed acquisition of Anzon Energy Limited and Anzon Australia Limited by Nexus Energy Limited and advising AED Oil Limited on its proposed joint venture arrangements with Sinopec International Petroleum Exploration and Production Corporation (SINOPEC).

The transaction also demonstrates the increasing number of deals in which Corrs is representing resources companies undertaking projects or business in Africa. One of Equigold’s main assets is a 85% interest in the Bonkiro Gold Project located in southern Ivory Coast in West Africa, where production is scheduled to commence in July 2008. Equigold remains the single largest exploration licence holder in the country with approximately 15,000 square metres of ground in the Birimian greenstone belt either granted or under application.

Adam Handley, head of Corrs’ Energy & Resources Industry Division notes: “Corrs is acting for a number of resources players who are looking at doing deals in African countries including Angola, Cameroon, Guinea, Madagascar and South Africa. High competition and costs of production in traditional mining areas such as Western Australia means that new markets like West Africa are creating new and exciting opportunities for miners willing to explore further afield.”

Adam Handley and Kylie Frazer are leading the transaction team, which includes Iain Laughland, Stephanie Daveson, Jonathan Leek, Stan Lewis, Tara O'Rourke, Gina De la Cruz, Amanda Dunne, Les Gavara-Nanu, Katrina Sleiman, Louise Alford and Juanita Rayson.

Kylie Frazer adds: “The deal clearly demonstrates the national nature of our Energy & Resources team with all four offices involved in seamlessly managing the transaction for the client.”