U.S. Hedge Fund Offers C$120M for Canadian Gold Miner
Luxor Capital Group, a leading hedge fund based in the United States, has offered to buy Canadian miner Crocodile Gold for about C$121 million, prompting shares of the latter to climb more than 40 per cent during Wednesday trading.
Crocodile Gold said it has set up a special committee to review Luxor Capital Group's bid to buy a majority stake in its company. On Tuesday, Luxor Capital Group announced it intends to buy purchase up to 215.5 million Crocodile Gold shares at C$0.56 per.
On Wednesday, shares of Crocodile Gold spiked 14.5 cents, or 42.65 per cent, to 48.5 cents on the Toronto Stock Exchange. It was the day's most active issue, with volume just under 26 million shares. The miner's shares have been hit this year as it struggled with lower-quality grades output and delays at its mines.
Luxor would own 85 per cent of Crocodile Gold's outstanding shares should the Toronto-based gold producer accept the offer. Luxor owns 10 per cent of Crocodile Gold. Moreover, Luxor will get an operating gold miner that produced only 18,186 ounces gold in the last quarter with a $2 million operating loss.
Crocodile Gold owns and operates mines in the Northern Territory of Australia. Last month it announced it will cut production forecast for 2012.
Crocodile Gold said it had $49 million in cash and its equivalents as of Sept. 30.
Luxor Capital Group has presence in a number of diversified assets, including stakes in a media company News Corp.; medical products company Nordion; clothing company Abercombie & Fitch; and Canadian junior exploration company Cardero Resources.