Gold producer Citigold (ASX:CTO) (Nasdaq Dubai:CTO) (FSE:CHP) has announced an off-market takeover offer for all of the shares in gold explorer Gateway Mining Limited (ASX: GML).
Under the terms of the offer, Citigold is offering Gateway shareholders 2 Citigold shares for each 5 Gateway shares held.
Currently, Citigold is a substantial and the single largest shareholder in Gateway, with 16.3 million shares, or 15% of the issued capital of Gateway.
Gateway is an established gold and base metals explorer with several early stage prime prospects in New South Wales, Western Australia and Queensland.
Gateway has 110 million shares and a market capitalisation of $8 million at share price of 7 cents.
Gateway's focus is on increasing the size of the 25,600 ounce gold resource at Whistler deposit in Western Australia in the short term. A recent RC hole intersected high grade gold at 22m @ 15 g/t.
Another prospect is Julia's Fault, a maiden gold discovery with significant potential. Julia's Fault remains open along strike to the north and is part of a 3km-mineralised corridor extending into Victory Creek.
Citigold is keen to expand its holding to gain further exposure to this Australian based pure exploration play.
Investors may recall that Citigold recently wrapped a A$11.4 million capital raising via a share purchase plan and placement. This was to fast-track gold production at Charters Towers goldfield.
Citigold intends that Gateway will remain as an exploration entity under its own management. While Citigold management and technical team will focus on expanding gold production at Charters Towers.
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